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Dear Everyone!
The last two weeks have seen me enter underwriting hell. I can't get anyone through the gatekeepers. It's very discouraging.
However, when the insurance gods taketh away, they giveth back something else. We soon enter Medicare Advantage open enrollment... and these are guarantee issue... no underwriters.
I'm starting to get a number of invitation to speak. If your club, group, company, or organization wants/needs a speaker about financial matters, give me a call. "Four score and..."
-Al
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Mega Is A Vega
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Are any of you old enough to remember a car that Chevy put out called the Vega? Or how about one by the defunct American Motors called the Gremlin? And maybe one of you once had a Ford Pinto?
What was it about these cars that those who had them STILL remember them? I'll tell you what. They were crap. They were so bad, that they defined "bad."
The Pinto would explode if rear-ended. The Gremlin fell apart while you drove it... one piece about every five hundred miles. And the Vega... ah the Vega... had an engine that had a propensity to... melt. You're at a stop-light... the car stops running... you get out to look under the hood... and your aluminum engine block looks like a blob of black candle wax on the pavement under your car. Yeah, that's a good feeling. (And they wonder why a whole generation of us drive Toyotas.)
There is a company (actually a conglomeration of companies) that insurance agents refer to as the Chevy Vega of the business. And it's not just agents... so do the staff people of various DOIs around the country as well. (Each state has a Dept. of Insurance to regulate carriers and agents.) The company is known to us (agents) as Mega. You might have seen it as NACE or as Alliance or as AFS. They have lots of hats (actually masks.)
Why is this a bad, bad, bad deal for you? Well, take a quick look at this one page article from USA Today about 3 weeks ago.
Now folks, here is the concept... I call it Basic Health Insurance 101. What you pay is normally capped (by your out-of-pocket max) and what the insurance company pays is not (until a max of a few million.) But with these guys, what they pay is capped... and what you pay isn't! So if you have one of these policies and have a bad accident, they will pay a few bucks until they reach their cap... and you will lose all your savings. Yeah, that's what you really want from your health insurance, right?
It's not just the plans. You gotta love the sales practices taught by management and practiced by their agents to tell half-truths, to enroll employees in non-group plans when they qualify for group (bigger commission for agent), and to not fully explain that the clients were NOT getting a major medical plan.
We agents have chat boards (open to the public... www.insurance-forums.net is one of them) and we regularly lament about how a few carriers and a handful of greedy agents in any given community can give us all a bad name.
Well, it looks like Massachusetts and Delaware are both going after this company... which by the way is a such huge cash-cow that the Blackstone Group (you read about their recent IPO) bought it for 1.6 billion clams.
I have prospects who have NASE or Alliance policies and I beg them to get rid of them... if not through me, than through someone else... just do it.
Case in point, a 55 year old woman who runs a day-care center has one of these. I've been calling her since Feb. to make a change and I've always received the "I'll do it, but not until next month." I called last month and she said "As soon as I get back from vacation." Well, the day before she left she fell, tore up her knee, and she will probably never be able to get insurance now. And what is her policy going to pay. In Yiddish there is a word for it... bupkes (or bupkis... your choice.) Look it up.
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| Get a Life
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There is a day, week, or month for everything and this is national life insurance month. I personally think they ought to call it death insurance, but would you be surprised to learn that damn few people in the industry listen to me?
Do you want to start a holy war among life/health agents (like me)? Get a few of them in a room and ask them whether you should get term life or whole life?
Of course, first you have to know the difference. Term life is 'rented coverage.' You pay X dollars for X years and if you croak, your beneficiary gets to go to Rio right after the the check comes (which is about a month after you've assumed room temp.) Term i very simple. You can buy it in amounts as low as $1000 on up to as many millions you qualify for. The "terms" come in ranges of 10, 20, and sometimes 30 years. The monthly premium is usually the same during the term (you will see it refred to as 'level term.') At times during the term, or sometimes at the end you can usually buy more without a health exam, but at a higher rate.
Permanent or whole-life (WL) insurance is paid until the day you die (and sometimes after, but that's another issue.) The cost does not change. Part of what you pay goes for the so-called cost of the insurance, and the rest goes into what is called the cash-value (or surrender value.) Permanent life is often 50% to 100% more expensive each month than term life during the early years, but later on it can be (usually is) lower.
The cash value (CV) builds up over the years and you can borrow this and not pay it back, but any loan you take accrues interest and together will lower the final death benefit. There is no free lunch here.
You can also cash in (surrender) the policy and get the cash-value.
So you want to know what I recommend? I lean more to term, especially for young people without a lot of money. As income goes up, you can often convert it to a whole life plan.
With people living longer, what is important is not JUST the death benefit, but the riders that you can buy. You want to have an option (for a few bucks more each month) to have an accelerated death benefit... such that if you come down with something that is going to croak you, you can get some of the money sooner, to pay the bills. (Of course your beneficiary won't be happy, but hard cheese!) Some term life plans have long-term care riders too.
The one thing I want to caution people about is the cash-value that you get with whole life. Often WL is sold as an 'investment.' Well, it's not. Yes it pays "interest" or a "dividend" but you are far better off putting the difference between the high WL premium and the low(er) term premium in a good long-term bond or annuity or CD.
The big value of WL is that it is forced savings. If you start out early in life and put away a few bucks each payday into a WL policy, you won't be broke when you stop working and if worst comes to worst, you can surrender the policy and get the dough.
You've heard the expression "Buy term and invest the rest." I believe in that. However I know that most people either don't invest... or they invest and lose it. But if you are a disciplined person who will put 10 or 15 cents of every dollar you ever make in a safe security, term is what you want.
You ought to have SOME life insurance, if for no other reason than to pay off your house, or to plant you in the ground, and/or so your spouse does not have to get a job on the day after your funeral.
One interesting statistic is that the cost of death insurance has come down over the past several years, but Americans are way under-insurred. If your spouse died, how long would it be before you lost the house, your life savings, etc. in trying to re-adjust to the loss of income? Instead, what if I bring you a check for a million bucks which you invest in a single premium fixed annuity that immediately pays a monthly income for as long as you live?
No one likes to talk about death insurance... but it's a conversation you should have with an agent who knows what they are talking about and who will take the time to determine what is best for you given your particualr circumstances in your stage in life.
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Forward March!
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I've been watching the Ken Burns "War" series on PBS this week and found this interesting little tidbit in one of the commentaries I read about the show. During the war, GI Insurance cost $6.40 a month for $10,000 coverage, but it was not mandatory.
In 1944 there was a Corporal Jameson who was assigned to the induction center in Dallas, where he advised new recruits about their government benefits, especially their GI insurance.
It wasn't long before Captain Beaumont noticed that Corporal Jameson had almost a 100% record for insurance sales, which had never happened before. Rather than ask about this, the Captain stood in the back of the room and listened to Jameson's sales pitch.
Jameson explained the basics of the GI Insurance to the new recruits, and then said: "If you have GI Insurance and go into battle and are killed, the government has to pay $10,000 to your beneficiaries. If you don't have GI insurance, and you go into battle and get killed, the government only has to pay a maximum of $200."
"Now," he concluded, "which bunch do you think they are going to send into battle first?"
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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
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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