How valuable is your manager??

This is a country made of small businesses and generally speaking, all of those that have employees have managers. As long as I am sailing with generalities, I think it’s safe to say that a good manager is a very valuable asset. Which leads me to another generality. I believe that most business owners would agree that insuring the valuable assets of their business is a prudent idea. And lastly, the loss of a valuable asset can cause a substantial financial loss to the business if it isn’t insured.

I’m not sure an attorney of generalities could have built a better case for a type of business life insurance called key man insurance. The way key man insurance works is that a value is determined that represents the loss to a business if the key person should die. It can be done several ways, but for the sake of this example we will say that the life insurance policy, in this case, a return of premium term insurance policy, is two times the annual premium of the manager. We pay our manager $125,000, so we insure his life for $250,000.

We have determined, in this case, that it would take about two years to hire, train and bring up to speed a new manager. Because our manager is so integral in the success of the business, we anticipate that there would be some turmoil caused by his untimely death. There might be customers lost, production slow downs, employees lost, etc. We might also need to anticipate paying a hiring bonus so we can hire as high up the food chain as possible to minimize the turmoil. Anyway, suffice it to say we can certainly justify the key man policy.

Now to why I decided to buy a return of premium term policy to fund our key man policy. Let’s say that our manager has 15 year to go to retirement when we purchase the policy and, being the good employee that he is, he doesn’t die but keeps on doing a stellar job right up to his retirement day.

During those 15 years we have insured a valuable asset of the business to protect the business. Our manager has made us tons of money and save us hundreds of tons of headaches, because that’s what good managers do. So now it’s time to give him a bonus.

Our return of premium term policy has cost the company $4000 a year for the last 15 years and now, because our manager is still alive and we bought the right kind of life insurance policy, the company gets back all of the premium paid in. Well, that just freed up $60,000 that we can hand to our retiring manager at his going away party. A bonus for a job well done.

If that doesn’t get you all choked up, you could be a manager whose employer bought the wrong kind of term life insurance.

Who is your life insurance advocate?

Advocate is defined in the dictionary as “one that supports or promotes the interests of another”. There are several “advocacy” groups that promote life insurance to their members or to the group of people that they would suggest they are advocates on behalf of.

 Let me suggest three advocacy groups that you would suspect would offer the best possible life insurance products to their members or audience, when in fact they offer downright bad deals and try to gloss it over by appearing to be your “friend”.

Let’s start with Gerber. I’m not sure if their baby food is any good, but I can tell you that the juvenile life insurance, or children’s life insurance they offer, is far from a good deal. They offer a guaranteed issue product, but from a price and benefit standpoint it pales in comparison to what can be found through an independent life insurance agent. Pretty baby on the jar. Lousy life insurance!

Next let’s talk about the AOPA. For those that don’t fly airplanes, that is the Aircraft Owners and Pilots Association. Go to their website and you will see how they purport to be advocates for private pilots in just about every area, including life insurance. Their company of choice is Minnesota Life. There are so many companies out there that can beat Minnesota Life for aviation covered life insurance, that if you weren’t depending on them to be your advocate, it would be laughable. If you dig into the life insurance end of their website you will actually find where they admit that they get a kick back from Minnesota Life which they use to further their advocacy. Maybe Minnesota Life’s rates are high because they have to pay the AOPA to steer business their way.

And last but not least, being old enough to be a member, our beloved AARP. Now claiming to be an advocate for us old folks and really not doing it is, well, WRONG!!!!!!!!!! AARP pushes a New York Life term product that is overpriced to start with, the price goes up every 5 years, and after age 80 it goes away. “One that supports or promotes the interests of another.” Now I don’t know if AARP gets a kickback from New York Life, but I do know that they don’t allow any other life insurance advertising in their periodicals or on their website.

You want an advocate? Someone who really does what the definition suggests? Get your insurance quotes for your term insurance, universal life insurance or whole life insurance from an independent life insurance agent. Get unbiased advice from an agent that isn’t being an advocate to a specific insurance company or an organization, but to you.

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.