Estate taxes and life insurance??

As we close in on 2010, the year that congress is slated to do away with estate taxes, is there anyone out there that really believes estates won’t be taxed after 2010?

Personally I believe the government will take action to leave the estate tax on the books. The good news is that the spousal exemption limits that were just over $600,000 in the year 2000 will likely be much higher, probably being capped somewhere between the current $2,000,000 and the 2009 proposed level of $3,500,000.

Let’s just pretend for a minute that the Federal government decides to follow through and repeal the estate tax in 2010. That would free everyone up to dump the life insurance policies that they have in place to pay estate taxes, right? WRONG!!

States are already seizing the day with the slack in the new exemption limits. Washington state has reared the ugliest head so far by instituting up to a 19% “death tax” on estates for Washington residents. If the repeal really did go through you can bet that the states, seeing an opportunity for new revenue, will fill the void before the ink on the repeal dries.

Universal life in perspective!!

With literally hundreds of thousand of life insurance policies at risk out there, I just can’t emphasize enough the danger of not reviewing your coverage. This is an agent caused problem, so I believe the prudent direction would be to have your universal life policy reviewed by an agent other than the one who wrote the original policy. The original agent often has a vested interest in you not knowing the facts.

 To recap, many universal life insurance quotes were originally provided, much like adjustable rate mortgages, with little or no discussion of what happens if things start going in the wrong direction.

Millions of people are losing their homes because the mortgage broker took the path of least resistance and showed his customer the cheapest way to get in the door. I wonder if he or she is around now to hold that door open as they leave their American dream behind.

Hundreds of thousands of universal life policies will have their prices skyrocket to unaffordable levels in the near future all because an agent to the path of least resistance and showed his or her client the cheapest way to get in the permanent life insurance door. If that agent is still in business, they should have to sit down with your family and explain why they didn’t show you the guaranteed option and offer you a choice of a product that wouldn’t self destruct.

 Don’t wait to get your life insurance reviewed. The cost of waiting too long is enormous.

Life insurance waiting period??

One of the most common misconceptions is that there is a waiting period before the insurance would pay. Most people say they’ve heard life insurance doesn’t pay if you die in the first two years of a policy.

 The confusion lies somewhere between two different types of life insurance policies and the public’s concern that life insurance companies are less than honorable.

 The truth is that “guaranteed issue life insurance” does, in general, have a two year period before it becomes fully in force. If death were to occur during that two years no benefit would be paid, but all premiums plus interest would be returned. Keep in mind that the only people that buy guaranteed issue life insurance are those who cannot qualify for a fully underwritten term of universal life policy, or those who fall for advertising telling them they can get insurance without an exam or medical questions.

That truth gets mixed up with the “two year suicide and contestability period” that pertains to all fully underwritten life insurance policies. During that two years the company would not have to pay if the insured were to commit suicide or die from something that they misrepresented on the application.

Claims during that two year period will almost always be reviewed. If you’ve told the truth and your agent has done a good job, they will always get paid.

Life insurance for children!

Now here’s a subject that 95% of parents don’t want to talk about. No parent wants to think that a child might die and therefore we don’t want to plan for that occurrence. I understand the emotional issue behind it, being a parent myself.

Children’s life insurance, sometimes called juvenile life insurance, can actually be a prudent way to give a child an inexpensive jump start on their own insurance portfolio when they become an adult.

There are policies out there that can provide small amounts of coverage, truly no more than burial policies, during a child’s growing years. Some increase incrementally as a child gets older. Usually at age 23 the child has the opportunity to convert their juvenile policy into a larger personal policy. The next thing I want to say is so important and is the key to the importance of a juvenile life insurance policy. That conversion DOES NOT REQUIRE EVIDENCE OF INSURABILITY!!! No matter what your child’s health is at the time, the company is bound to offer them the adult policy without any rating due to health problems.

 These policies are very inexpensive if you buy them as stand alone policies. Do not add a child rider to your policy or buy a Gerber or Globe Life policy unless you just feel like paying more money than you need to for your children’s life insurance. If you have a child rider or a Gerber or Globe policy, seek out a more affordable alternative and cancel it once the new policy is in force.

Free life insurance!!

Wouldn’t it be great if you could just use life insurance during those years you need it and it you didn’t die, it wouldn’t cost anythng?

Well, there’s good news for you. Return of premium term insurance does exactly that. You can take out a guaranteed level premium 15, 20 or 30 year term and if you are still around and kicking at the end, you can receive back all of the premiums you paid in over all of those years. With some policies, cancelling before the end of the term can still result in a partial refund.

The premium is higher than straight term insurance, but it is an answer to the age old term insurance question, “What happens if I outlive the term.” Now there are two options. You can receive a cash refund or you can use that cash to convert to a paid up universal life policy.

 It’s not a product for everyone, but it can be an answer, a very good answer in many personal and business life insurance situations.

How important is it to have a home town life insurance agent?

My customers don’t see it as important at all. So, let’s look at the pros and cons of a local versus, say a multi state or even nationally licensed agent.

 With a home town agent you can shake their hand or beat them with a baseball bat, whatever the occasion might call for,  with no driving or flying expense. Right there is where the pros end for the local agent.

 As for the cons! A home town agent serves a comparitively small population and therefore does not do the volume it takes to know the products and the underwriters that will approve the products. Because they don’t know the underwriters and very often don’t have the computer software or staff needed, they tend to be slower at providing life insurance quotes and getting insurance approved.

 A home town agent is less likely to be there when you call with a question, less likely to return a call in a timely manner and (this is very important), less likely to stay in business as the majority of life insurance sales is increasingly done on the internet and with nationally licensed agents.

 A home town agent cannot service your needs if you should happen to move. And lastly, in order to survive, most home town agents either have to become captive agents or diversify to a large number of products. If they are captive they can only represent one company and therefore cannot be objective in providing a product for your situation. If they diversify, they simply cannot be expected to know all the nuances of each particular industry or product .

 In short, it is highly unlikely that you will get a better product, price or service with a home town agent. So, unless you want to shake their hand or beat on them, compare before you buy.

Life insurance for private pilots!

Most of the private pilots in the US have had some experience with the effect their hobby or avocation has on their life insurance rates. Insurance companies generally don’t look favorably on private aviation and the insurance quotes that most companies and agents provide reflect that.

 There are a few companies out there that offer fair, reasonable rates for term insurance and universal life as long as the pilot meets threshholds. These threshholds reward those who are experienced and fly enough to maintain their proficiency. It’s important when a pilot chooses an agent, that they question that agents’ experience and proficiency in finding competitive rates.

Too much life insurance??

I’ve heard some good ones. “I don’t want to make her rich”. “She only needs enough to get by until she can find another husband”. “What happens if I’m still alive when I reach the end of my term insurance”?

 A lot of excuses for not stepping up and buying adequate life insurance. How about we put ourselves in the other shoes? If I was left behind suddenly with a house to pay for and children to raise, how much life insurance would be too much?

Mark Twain once said, “The man who dies without adequate life insurance should have to come back and see the mess he’s left behind.” Let’s value our spouses and children and, as their caretaker, be glad that we can buy adequate life insurance to make sure they are as well, or better off, than we left them.

Term insurance versus universal life!

The question is how to decide which product is appropriate for your family protection.

A simple rule of thumb would go something like this. If you can determine (approximately) the point in the future when you won’t need the coverage then you have a term insurance need. An example would be if you have an eight year old child. That translates into a 15 year term insurance need. I always recommend you carry coverage for the protection of your children until that age when they could have at least one college degree under their belt.

If the need is one that never goes away, whether as simple as final expenses or as complicated as estate protection, the universal life is the appropriate product. You want something that is guaranteed to still be in force when it’s needed. Always insist that your universal life policy is guaranteed for life.

I have good news and bad news about your life insurance

Hi, My name is Ed Hinerman. I haven’t been selling life insurance forever, but I have been around long enough to see radical changes in products available. I just want to share with you today what I consider to be one of the most troublesome leftovers from the last century. This problem will end up with owners of life insurance policies spending huge sums of money, only to have their policy fail inspite of having been assured at the time of sale that they were buying permanent coverage. BIG PROBLEM!!!!!

 In a nutshell, permanent life insurance has cash value and by law has to be illustrated to show what is guaranteed and what is not. The problem is that 90+ percent of agents are so desperate to make a sale that they will emphasize what is not guaranteed (because it’s less expensive) and may or may not mention what the real guarantees of the policy entail.

 The problem is that historically the non guaranteed illustration, also called the current illustration (because it reflects what is true at the moment the illustration is cumputed), fails to hold up.  The policy collapses and all of the money paid in is lost. Unless you can arrange to pass away prior to this meltdown, you heirs will receive nothing from your life insurance policy.

There are products available today that can provide guaranteed policies at much lower costs than in the past. There is no good reason to buy a policy that is not guaranteed to be there when it is needed.