[Note: You may have to click "load images" in your email program if you don't see my pix at the right.]
Dear Everyone!
I want to welcome a number of new readers whom I met at the Folsom Chamber events recently.
What a mess the financial markets are in. People write me and ask me "When will this all end?"
I'm reminded of the story of Bernard Baruch, the great financier. He was asked by a reporter, "Sir, will the stock market go up or down?"
The great man replied to the young reporter, "Yes, but not right away."
There are always opportunities out there and there are always solutions to problems. In this issue I talk a bit about an opportunity to save on life coverage... and a solution to being turned down for health coverage.
I hope you all have a wonderful Thanksgiving.
-Al
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Buy low... not high!
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Life insurance has been and currently is a bargain. Rates have dropped over the past several years. However, that is due to change.
If you are smart you will get the coverage you need sooner, rather than later.
The financial crisis will drive life insurance premiums up.
I'm sure you realize that while some of what you pay goes to reserves to pay claimes, most of it gets invested by the insurance company... usually in high-grade corporate and government bonds.
Insurance companies have been able to hold rates down because they were making high returns on their investments. Not so anymore.
Also, insurance companies spread the risk by "buying" (re)insurance from other financial institutions willing to put their cash on the line... for a price. These costs are going up too.
Finally, the economic dislocations in employment will cause more people to cancel policies.
For insurance to be low-cost there must be large numbers of people who buy AND good returns in the market. Absent those, rates will rise. The increase will be substantial, and when you couple that with the fact that YOU will be older and be at a higher base rate if you wait, you WILL pay more for the same coverage you can get today.
Life and disability insurance is a bargain today. It won't stay at this price for long.
If you have not had your insurance portfolio reviewed in the past three years... now is the time to call your broker and get it done. It costs nothing and might save you a ton of money later on.
And if you don't have any life or disability, it will only cost more later. That's the truth. You can pay less now... or more later. It is up to you. I say buy low... not high, but that choice is all yours!
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No IFP for you? Maybe group?
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Remember the "soup guy" in Seinfeld who would say "No soup for you!"? What about when they say "No health insurance for you?"
Everyone talks about the huge cost increases in individual and family plan (we agents call it IFP) health insurance as being an impediment to people getting insured. But we agents know that cost is not the main reason so many go without coverage. It's all about (medical) underwriting.
What is underwriting (we call it UW in the trade)? This is simply the IFP approval process. When you apply for IFP someone at the insurance company is assigned your case. She (most seem to be women) gets all your medical data, looks at your age, looks at the pills you take, and uses company guidelines to apply a "score" to your application. Like, golf, the low score wins. If you rack up too many points, you are denied coverage.
If 100 was the "score" that disqualified you a year ago, it is more like 60 now... and going down... such that if you have a pimple on your nose... and you are over age 50, you don't have a prayer of getting through UW and being approved for IFP.
UW has gotten so tight (with all carriers) that many agents (like myself) don't even LOOK for individual customers anymore... because... well... we work hard to present the IFP quotes and spend a lot of time on the phone or in person helping the client choose a plan, and we guide them through the long and detailed application... and we track the application on the web... only to see all that work go up in smoke because they have slightly elevated blood pressure or cholesterol and the underwriter declines the app. We simply can't work for free... and when more than half of our clients get denied, that's what we end up doing.
True, IFP pays agents around 20%... but 20% of nothing... is nothing!
So what is the opposite of IFP? It's called "group." Group is the insurance you get at work. The boss usually pays at least half (most often much more) and you pay the rest. What is so good about group coverage? IT IS GUARANTEE ISSUE. (We call it GI.) You cannot be turned down for group. There is no (or very little) medical UW. (There may be a wait-period for pre-existing conditions but new "ailments" will be covered.)
We tell people who can't get IFP to "Get a job with a company that offers (GI) group." Good luck with that in this economy!
Here is the dirty little secret in the health insuance business that you don't know about and the carriers don't want us to tell.
If you start a business (in CA), you only have to hire one other person and pay them minimum wage for at least 20 hours a week... and IF this other person is covered by EITHER a government program (like Medicare) OR some other group (like their spouse's job) than you become a "group of one" and you can call a broker sign up for GI group coverage.
It's not cheap... usually 30% to 90% more than IFP... but you WILL GET insured and you have a huge array of plans and rates to choose from.
The (new) business does not have to make a profit... but it MUST show real payroll for 60 to 90 days before coverage is granted (a CA form DE-6 or statements from a payroll company like PayChex is required.) Also, you must sign an affidavit that this is your full-time endeavor.
(Owners of a partnership or certain corporations do not have to prove payroll with some carriers.)
Each year the business has to "renew" the coverage and MAY HAVE TO show the payroll reports and prove it has at least two on payroll. Often times no "audit" is done by the carrier. You never know if or when they will do the full audit.
There are other parts of the "paper chase" (business license or corp papers and lots of forms to sign and documentation to show) but THERE ARE NO HEALTH ISSUES in the consideration of whether you are approved or not. If you are alive and you can show payroll and you look and act and smell like a real business (up to interpretation)... you will get coverage... and it usually takes about 14 days!
With many people losing their jobs and companies going out of business (meaning there is no COBRA because there is no more group plan) you will be seeing a lot of new business formations.
Are they being formed to make money... or to get insurance? I don't know the answer. Here are the legal questions. "Is it legal (in CA) to start a business TO get insurance?" No. But, "Is it legal to start a business AND get insurance?" Obviously yes.
I'll let the lawyers figure it out. But right now, under what is called AB 1672 passed in 1993, small businesses can get GI coverage... again, meaning without medical underwriting.
Agents get paid 7%. That's all. But 7% of something is, again, better than 25% of nothing. If you pay $300 a month in premiums for your group coverage, the agent gets $21 a month.
Of course a lot of agents won't write small group... but that is because they don't understand that twenty groups of two or three is better than one group of 40 to 60. Why? A large group will leave a broker for another broker who comes to them with a fifty cent savings. But small groups tend to be totally loyal to their broker and will stay with him or her forever (perhaps because it is hard to find another who will work for $21 a month!)
If you have been turned down for IPF and you can't find a job with group benefits and you have the financial resources to start a full-time business (Amway, dog walking, consulting, writing, retail... whatever,) you might talk to an agent about getting your own group coverage.
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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, disability, Medicare, life, and annuities.
Most importantly, I'm honest. I will not put you in a product just for the money. I've lived in the Northern California area for 35 years and I've built my reputation on integrity and honor.
It's that simple.
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