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Dear Everyone!
I got a phone call last week from a client whom I wrote health coverage for. He was diagnosed with cancer and while the odds are not in his favor, he has a shot at surviving.
He told me he was glad I "talked him into" (more like ranted and raved about) getting rid of his limited benefit plan from NASE and into a full major medical plan. He needs it now. Otherwise he would go bankrupt.
He also told me he wishes he had followed my advice and let me review his life policy. I called him twice on it but he just put me off. He had bought it ten years ago. He said he took the policy papers out of his desk the other day and found out how small it was. He now wants to get more... but knows it was impossible with the plan he has. I could have written him a better plan a year ago. While the $100,000 he now has will help, it is not the half million or one million that his family will really need... and which he wants for them.
What's in your life policy? Call me and we'll review it together. You don't want to be this guy... not if you value your family and want them secure. Besides, insurance costs less today than ten years ago. My bet is I can get you more coverage for less money than you pay now. But you have to have it reviewed. It won't happen unless you call me or your own agent. It's free. No one will charge you for a plan review... so do it!
-Al
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Say Bye-Bye to Your Health Agent?
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I don't know if you follow the news about so-called health insurance "reform" going on in the State Capitol, but one of the bills under consideration will require carriers to limit administrative costs to 15% of the premiums (rates) collected.
In other words they will have to pay out 85% of everything they take in.
First of all, how will they do that? While they can make some good projections, they don't really KNOW how many people are going to get sick and file claims. They just don't! What the legislation is trying to do is make sure that the carriers don't make a profit.
Now I'm not lover of the health carriers, but I don't see how this is a good thing.
I don't know what the cost of doing business is for Aetna or the Blues, but my guess is that it is a lot more than 15%. How many businesses do you know where costs are 15% or less of total revenue?
I'm not sure if the legislation means 15% of premiums or 15% of ALL money the carrier makes (via it's investments.)
Of course all the agents are jumping up and down yelling and screaming because if this goes through it's a good bet that commissions will be cut to the bone. All carriers (I know of) except Aetna and Kaiser pay 20% to the agent of the first year commission on individual health plans. So if I sell you a Blue Cross plan for $200 a month, I'll get $40 a month for a year. The second year I get a small renewal... assuming you have not changed the policy or lapsed it.
On group coverage we get 7% which is why no agent wants to write SMALL group... a mom/pop outfit who takes the cheapest plan... for $200 a month... leaving the agent with $14 a month... for a hell of a lot of paper-chasing work. Selling group health is a good deal at 7%, but only if the groups are more than five or six lives. The ONLY reason I (and any agent will) write a micro group is that I often can cross-sell the owners or some of the staff life or LTC... where I get a living wage. Otherwise a health coverage group of two or three is a "why bother."
The one "nice" thing about writing group... is that it is "always" a sale. There is no underwriting. It makes no difference how sick anyone is... group insurance in CA is guarantee issue. Not so individual coverage.
If this legislation goes through, who in their right mind is going to try to sell individual coverage for say 4% commission... where the agent can work his butt off in finding a client and then working with them, only to have half of his cases kicked out by underwriters? Who can afford that? Not me, that's for sure.
Indeed, that is why I'm working MY butt off to transition from 70% health and 30% life (LTC, annuity, disability) to the exact reverse. Life is (a lot!) harder to sell, but the chances of the sale going through are far better.
A lot of people who sell health insurance are not stupid! (Read that again.) Those with half a brain (almost a majority!) are getting a picture of the future of health coverage... and they are not part of it! That's why you are likely to see fewer and fewer agents in the sector. We just won't be able to afford it if this legislation goes through.
Now what if health coverage is mandated? What if the state will pay us 4% commission on something people MUST (by law) have? That might work. I've not run the numbers, but the folks who sell home and auto work at low pay-out percentages and how often do you drive past a State Farm, Allstate, or Farmers office? Maybe every fifteen seconds?
Stay tuned. It should be interesting to see what happens. |
| Death |
Yeah, it happens. When you are in the life and health biz (which should be called the "sick to death biz") you get somewhat desensitized to sickness and death... even after you see it up close when a client gets sick and dies.
If the insurance advisor did his or her job the surviving family will not be financially impacted in the near term. The major hospital bills will be paid by the health plan and the survivors will get a large check from the life carrier.
There is an old saying in this biz: "There has never been a widow who thought her husband had too much life insurance!"
When a loved one dies, thinking about the life insurance policy may seem crass. Yet, ironically, thinking about life insurance can provide an enormous amount of relief. A loved one's death brings many things to think about and many expenses that are unplanned and, often unaffordable. The cost of the funeral itself averages $7,500-$10,000 and can be much more, and along with that expense (and others) comes the immediate loss of income.
The good news here is that filing a life insurance claim is very easy, even if you don't have all the details about the policy. In fact, it's easy even if you don't have the actual policy!
Steps to filing a claim
1. Look around to see whether you can find the written policy.
2. Call the insurance agent who sold your loved one the policy. If no agent is listed or you don't know who the agent is, call the company itself (or any local agent for the company, who will get you to the appropriate claims agent.)
3. Fill out the papers and forms as instructed. The insurance agent can usually do most of this for you, but the forms should be fairly simple, especially if you have the policy available.
4. Get a certified copy of the death certificate.
5. Submit the claim form with the death certificate. In just a matter of a few days to a week or two, you receive your settlement.
Choosing among settlement options
The most difficult part of the claim process is deciding on the settlement option you want if the policyholder hasn't already specified the payment plan. You can usually choose from several options.
Take special note of these two things:
You can arrange to have the funeral expenses paid directly from the proceeds of your insurance policy. The funeral director will arrange for this payment.
If you know your loved one was insured but you don't have the policy or know the name of the insurance company that issued the policy, you may be able to get the necessary information by contacting the American Council of Life Insurance at 1001 Pennsylvania Avenue, NW, Washington, DC. 20004. The Council will forward your inquiry to about 100 of the largest insurance companies in the country so that they can investigate whether your loved one had a policy with them.
Another great resource for finding if your deceased loved one had a policy is www.mib.com. This is the best life insurance database in the United States. I believe there is a small search fee.
There is one thing I love about life insurance carriers. Unlike health carriers who often do whatever they can to weasel out of paying a large claim by rescinding the policy (read the news!) life carriers ALWAYS pay their claims. Always, always, ALWAYS. Unless there is some suspicion of fraud (the death was faked) the claim will be paid, quickly and without a lot of hassle. Why? Because the life carriers have more money then God! (Which is another reason why there is no institution safer to put your money into than an old-line, conservative life company... like Mutual of Omaha whom I write most of my cases with.)
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| "Weasel" Provisions and Exclusions |
I was in a retail store in Fair Oaks this week and met a lovely young women. We got to talking and when I told her I was the "dreaded" local life insurance representative, she mentioned that she had no insurance on her or her husband.
What was more curious to me was that she was more interested in what I call the "weasel provisions" of life policies... the ways that the company can weasel out of paying. I don't think I've ever had a client all that interested in that subject before. Perhaps it's a sign of the times... the cynicism and distrust people have in financial institutions and products.
So let's take a look at the "weasel provisions."
Every insurance contract has - usually in very small print - a number of paragraphs that are essential for you to read. Basically, in addition to some fairly obvious concepts (such as, "all amounts paid will be in United States dollars"), these paragraphs list all the reasons you would not be covered - that is, reasons your beneficiaries would not get any of the funds you specifically provided for them.
Age and Sex
This provision is a way for the insurance company to cover itself in the event that it (or you) made a mistake, listing you either as the wrong sex or as older or younger than you were at the time of application (people lie about age.) The insurance company cites these two factors because they're the two critical elements in how much it charges you for the protection. If they catch you in a lie (or you just make a mistake) the insurance company adjusts the policy benefits for the correct age or sex. (You ask, what happens after a sex-change operation? Is the person re-rated to the other sex... which could mean higher premiums? I don't know. It has never come up in my agency so far!)
Suicide
Just about every life insurance application contains a suicide provision. This provision doesn't exclude all benefits if you commit suicide. Rather, it specifies that if you die as a result of suicide within two years from the issue date of the policy, your beneficiaries are not eligible for the death benefit (which may be referred to as the Amount of Basic Plan).
In addition, most policies also specify that if you do commit suicide within the two-year period, your beneficiaries will receive an amount equal to the premiums you paid on the policy from the starting date, called date of issuance, to the date of death by suicide.
Also note that the waiver of premium benefit, specifying that premiums will be waived if you become totally disabled, does not go into effect if the total disability results from "an intended self-injury".
War
Although some policies have specifically excluded paying death benefits when you die from injuries sustained during a war - whether you belong to the military or not - most policies do not. On the other hand, policies often exclude the waiver of premium benefit if you become totally disabled as a result of war.
Non-commercial aviation
Many policies will exclude a death benefit if you die as a result of a noncommercial airplane crash, meaning and airplane ride for which no fares are required and not provided by a registered common carrier... i.e. your own plane.
Dangerous activities
If you die while engaging in an inherently dangerous activity, such as skydiving or hang gliding, your policy may not cover you. Check the fine print to be certain - some policies don't exclude the activity but do charge higher premiums if you admit that you participate in these types of activities.
Incontestability clause
A key provision in most life insurance policies is the incontestability clause. The provision states that except for nonpayment of premiums, the company will not contest either the policy or the waiver of premium clause after the policy has been in force for specified period, usually two years. So if the company discovers an error in your application after that period, it can't go back and void the policy. This provision covers you even if you misrepresent yourself on your application, unless you misrepresent your age or gender as discussed earlier in this segment.
Premium provisions
The policy must specify how the premiums are payable and when they are due. The policy must also specify whether you have a grace period and, if so, how long the period lasts. During the grace period, the insurance company usually extends your coverage. If you don't pay your premiums by the end of the grace period, the insurance company will first look to any dividends it owes you to cover the cost of the premium. If you don't have any dividend or if the dividend is insufficient, the policy lapses and your coverage ceases. You remain covered until the insurance is officially terminated.
Next, the policy states whether any cash value will be used to pay the premiums and, if so, how you will be notified.
Finally, the policy states how long you have to apply for reinstatement if your policy lapses. This period can be as long as five years after the policy lapses, although you will probably have to show proof that you're still insurable. Furthermore, you will have to pay all the unpaid premiums plus compounded interest, as specified in the policy contract (approximately 6% per year).
Termination
As the word termination implies, the policy states when the death benefit, all riders, and the waiver of premium benefit will end.
Because most policies have a specified age limit after which you're no longer insured, take special note of the termination clause and when the policy ends. Doing so is especially important if you have a cash value policy with a declining death benefit and you plan on taking out the surrender value at some point. Toward the end of the insurance contract, as you age, the cost of the insurance becomes higher, eating more of the premium and surrender value. So be sure to withdraw the funds if you no longer want the coverage and would prefer to have the accrued value.
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Well, that's a wrap for this issue. I hope you've found some of the info above useful and interesting. If you have questions about life or health coverage, safe-money annuities, or employer group benefits just give me a call or send email.
Sincerely,
Alan N Canton
InsuranceSolutions123 Agency
InsuranceSolutions123.com
916-962-9296
CA License # 0F31110
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Al Canton, Owner
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I'm Al Canton, owner of the Insurance Solutions Agency.
Everyone promises the best service, etc. So I won't bore you with that message.
Bottom line, I know health insurance, work-supplements, medicare, life, and annuities.
Most importantly, I'm honest. I will not put you in a product just for the money. I've been here 25 years and I've built my business reputation on integrity and honor.
It's that simple.
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