Last year we had plenty of 5% annuities available and annuity sales were at an extreme high.  CD rates at the same time were at 4%.  See the table below;

As you can see from the above, annuity rates still were 25% higher than CDs last year and many clients jumped into their annuity with both feet.  Now a year later we see the following;

The difference in rates between these two vehicles is dramatically different today.  Economists stipulate that the interest rate environment will remain flat until 2012.  But, assuming we ignore economists, what would rates have to climb to in order to justify waiting today?

Today we can get 2.9% x 5 years guaranteed with an annuity and without the power of compounding, this equates to 14.5% over 5 years

• If we wait a year we would need to yield 3.62% on a 4 year annuity to equal 14.5% (a 54% increase off today’s 4 year annuities)
• If we wait 2 years we would need a 4.83% rate on a three year annuity to equal 14.5% (a 193% increase off today’s 3 year annuities)

Are you looking for a Universal Life policy with no cash value? Or maybe you want no cash value in your life insurance but you don’t like that term insurance plans end prematurely. I have a fantastic alternative!

Offered by one of my carriers, Midland National Life offers what they call their Essential Guaranteed Universal Life Plan (UL-G). This plan is built to keep your insurance in place forever without ever changing in monthly premium or in the policy face amount.

Secondly,  Midland’s UL-G is designed to be very competitive with term policies. Because the program does not promote cash value, all the premiums that you pay are solely going towards the cost of insurance. Therefore you could describe this plan as a term life insurance plan that lasts forever. The advantage being that you receive all the benefits of a Universal Life plan with the low monthly cost of Term Life plan.

Lastly the UL-G does have a premium guarantee built into the product. What this means is that unlike all other universal life policies that are dependent upon fluctuating interest rates to determine the cost of insurance, the UL-G will guarantee that you’re premiums will never change regardless of market performance. The price of the policy will not change nor will the face amount of the policy.

So if you are looking for a life insurance policy with no cash value that is guaranteed to last forever, the Midland National Essential Guaranteed Universal Life Plan was built to do exactly that. Offered by Finish Line Insurance Services, call us today for a quote on this great program.

Here are some good guidelines to make sure your insurance agent is doing his/her job well with the cash value growth in your life insurance policy. If you discover that he/she is not, by all means call me!

TIP #1 In order to over fund a life insurance policy properly you must first ensure without a doubt that the insured is healthy. The health class of the insured should be either “Standard Non-Tobacco” or “Preferred Non-Tobacco”. If not, than this is not an investment style that is in the best interests of the client. The less the insurance cost, the better the investment, so make sure you are either in a Preferred or Standard non tobacco class.

TIP #2 When over-funding a life insurance policy you should know that life insurance is governed by a 100 year old tax law. There is no grey area when it comes to legality here. But there can be a moral flexibility when in it comes to agents building your program, which is why I am writing this article. The more insurance you buy, the more the agent gets paid.

Your goal is to put as much money away as possible while purchasing as little insurance as possible.

The IRS has a limit as to how much money you can contribute to an insurance policy over the life of the policy. Always ask what the maximum amount is that you can fund the policy with. If you are not putting in close to the maximum amount that the policy allows, than you are not doing yourself any favors. The reason is this; You want the bulk of the funds you deposit to go towards the investment not the cost of the insurance.  This can mean the difference of thousands of dollars in your retirement years.

For example:

I am a 32 year old Preferred Plus Non Smoker (thank you Jesus!). If I were to purchase a $250K Equity Indexed Universal Life Insurance Policy today, here are some of the values: The minimum amount to keep the insurance in place until age 100 is $79.88 per month. The maximum the IRS will allow me to put in to keep this a non taxable event is $233.45 per month.

If I only put in the $79.88 per month, then by age 65 I would have deposited in $31,632.48, and at an 8.6% interest rate I’ll have a cash value of $62,232.00. That is a horrible return, because the cost of insurance is eating up all the cash value. I would have been better off buying a term plan and investing in an IRA (assuming I’ll die of old age).

Although, if I put in the maximum amount of $233.45 per month, then by age 65 I would have deposited $92,446.20 and I would have a Cash Value of $383,579.00. Now that looks much better. In addition the death benefit will have grown to over $470,000.

At this point I would elect to stop paying into the policy and I would annuitize it. Over the next 25 years of my retirement I would receive an annual income of $35,201.37. from this policy.

Let’s review, I put in a total of $92,446.20 over a period of 33 years and all the while I have at least $250K of life insurance. By age 65 I accumulated just less than $400K and decided to stop making payments. The policy then turned around and paid me a TAX FREE retirement income of over $880,000 over the next 25 years of my life. By age 91 the income stops and I have a life insurance benefit of $75,000 that I can access for Long Term Care if I need it. The Life Insurance will slowly decrease until age 100 where I will die as a happy handsome 100 year old man.

This brings me to my final tip

TIP #3 Make sure that you have at least a 15 year run to fund your policy. Do to the nature of the product,  life insurance policies do have a cost of insurance.  If you have not figured that out yet, please start back from the beginning of this article. We find that most cash value life insurance policies will not out-perform competing Roth IRA and Mutual Fund accounts until after 15-20 years of funding. These products are designed for funding long-term not short term.

Also - If you only have a short term run of 10 years or less, consider a Bonus Indexed Annuity as one of your options. These days you can still double your investment with a ten year run in an annuity.

Once again I hope this was helpful, please feel free to ask any questions via online or by phone.

This initial investment was $150,000 and the client at the time was 62 years of age. He did not need to begin accessing the funds for 10 years which left plenty of time for growth.

The VA came with a 6% bonus on the front end. The Single Annuitant Guaranteed Income rider included a 6% roll-up interest rate if grown for less than 10 years and a 7.2% interest rate of grown for 10 or more years. We illustrated the 7.2% rate for comparison.

The IA came with a 8% bonus on the front end. The Single Annuitant Guaranteed Income rider included 7.2% regardless of how many years the investment was left to grow.

At the ten year mark we could guarantee that the client would have a value to provide lifetime income within the VA of $318,672.79.  At age 72 he would be eligible for a 5% guaranteed withdrawal rate for an annual income of $15,933.64 for life.

Since the IA gave a larger bonus, the total amount grown after ten years was $324,685.48. The percentage for calculating the guaranteed income was also substantially different.

At age 72 the client would be eligible for a 6.0% withdrawal rate which gave him an annual income of $19,481.13 for life. Thats roughly $3500 of more annual income, Guaranteed!

Now let’s look at the costs for both products. The IA has no annual fees, no M&E charges, no trading fees and no broker fees. The rider on this IA did cost .45%.

The VA had an M&E charge of 1.85%, an Investment and Management fee of 1.2% and a guaranteed income rider of .85%. Total fees for the VA are 3.9%.

What I have done here is calculate the guaranteed values of both a Variable Annuity and an Indexed Annuity. Just the guaranteed values. I have no idea what the market will bare over the next ten years for my client. So what I did was gave him the information that these products guarantee.

We can speculate on interest rates all day, but these are numbers his retirement can count on.

In the end if you think about it, The Variable Annuity would need to outperform the Guaranteed Roll-up Interest Rate of 7.2% that the IA provides, after making up the charges built into the VA of 3.9%. That means that the VA would need to consistently grow at a rate of 11.1% for 10 straight years just to tie the Indexed Annuity. 11.1% !!!!!

I have 5 other points I would like to mention regarding the nuts and bolts of these product, but I’ll write about them a little later.

If you would like me to build a proposal for you and show you who can guarantee you the most retirement income for your future. Call me or fill out my Annuity Form. You’ll have it within 48 hours, comparing the 3 top companies for your retirement.

1. If you are electing to have a Lifetime Income Rider with your annuity, and you wish to take a pre-lifetime income withdrawal, you will not receive the “step up” or “roll up” interest rate credit for that year. You have been guaranteed locked in interest rate for your initial deposit to grow as long as you don’t touch it, the “roll up” rate. But many company brochures are not clear on the fact that you can not touch the money if you want to receive the roll up interest rate for that year. If you withdrawal your allowed 5% or 10% you will not pay penalties, but with most companies you will not receive any “step up” interest credit for that year.

Note: If you need income while your annuity is growing, consider splitting some of your funds into an immediate annuity that will pay you while your deferred annuity is left untouched and can grow freely without any risk of interrupting its due credits.

2. If you are receiving an initial premium bonus with your annuity, make sure that it is 100% vested in a short time period. Many annuity providers will give out initial premium bonuses, as high as 10-14% of the amount initially deposited in the annuity. Yet, these bonuses may have vesting periods as long as fifteen years. That means on a single annuitant scenario, if the owner of the annuity dies in year five of the annuity’s life, the beneficiary will not receive all of the bonus nor the growth that should have been earned on the bonus over the five years. It becomes prorated. Many companies will specify in their brochure whether the bonus is 100% vested in year one, and in death.

I will continue to write these helpful tips for all of you who are considering which annuity type is right for you. I hope you can use my agency and my website as helpful tools in order to make the most informed decision.

If you have any questions regarding these topics please feel free to call me today.

To a small business owner, their business is often their most valuable asset. The loss of a key employee or partner can leave them financially vulnerable. A business needs to be able to leverage their employee benefits to attract and retain the right personnel.

Fortunately, many of Finish Line Insurance Services carriers offer business protection and valuable accumulation for small business owners through an array of options to cover their needs.

A Buy / Sell Agreement protects the business in the event of an owner’s death. As part of a business continuity strategy, it allows an orderly transition of ownership and management.

A Buy/ Sell Agreement:

• Preserves the value of the business interest for the owner’s heirs by establishing a fair market price for the business
• Has the ability to provide cash for survivor income and settlement payments
• Determines who can buy the departing partner’s share of the business

A Key Person Plan protects the business from the financial impact and loss of experience of a key employee. This plan is owned by the business and helps provide cash to the company in the event of a key employee’s death. It can also be used as a source of emergency funds and as collateral for loans.

A Key Person Plan:

• Can be designed as an incentive for key employees
• Compensates for the time spent replacing the loss of the insured
• Remains with the business if the key employee is terminated or retires.

An Executive Bonus Plan allows owners to reward their talented employees with a tax-deductible bonus of insurance. The business determines which employees will participate and offers them an enhanced retirement package and / or survivor benefits at little or no cost to the employee.

An Executive Bonus Plan:

• Is a great employee recruitment and retention tool
• Does not require IRS approval
• Is easy to implement and can be altered at any time

To learn more about the opportunities available for your small business, contact the Finish Line Insurance Services today.

Sacramento Small Business Owner Programs

Our friends at the local agency CPS have shared a very exciting story will us regarding the topic of CAD. We often work side by side on cases in order to better serve our clients and are happy to relay this information to anyone whom this may help.

The Reality:

Coronary Artery Disease (CAD) is the leading cause of death in the United States. 17.6 million people alive today have a history of heart attack, angina pectoris (chest pain due to CAD) or both. This year an estimated 1.26 million Americans will have a new or recurrent coronary attack. Risk factors of CAD include elevated cholesterol and triglycerides, high blood pressure, diabetes, depression and family history of heart disease.

A Real Underwriting Approach to CAD:

One of our A+ carriers takes a flexible approach to underwriting that is designed for real-life scenarios. This carrier’s approach to Coronary Artery Disease could produce favorable results for your clients. Let’s take a look at this real life applicant with CAD.

• Male, non-tobacco, age 57
• Diagnosed with CAD at age 53
• Single vessel disease (95% blockage of the Left Anterior Descending artery)
• Successfully treated with angioplasty and stent placement at age 53
• Three year blood pressure readings 120/80 or less
• Total cholesterol of 185 with cholesterol/HDL ratio of 3.5
• An exercise perfusion scan performed within one year of the application revealed no evidence of ischemia, excellent level of fitness and an ejection fraction of greater than 55%

A Real Underwriting Decision: Standard!

Results may be different based on the age, sex and health status of your client.

Let the Finish Line Insurance Services Team help you take your challenging, real-life case and turn it into success. Call us today to learn more about this carrier and their flexible approach to underwriting.

Real Underwriting For Coronary Artery Disease

SacTown Blues is a chance to tell some good stories from experiences that I’ve had and also to promote myself as professional working blues musician. The site itself has music and video clips, and a blog that I plan to update weekly as I play and record with different artists in Nothern California.

I played over 100 professional shows and feel that it’s time to start writing down some of the experiences that go along with being a blues musician. These are the notes of one Sacramento harmonica player, these are my SacTown Blues!

A recent survey was held by Allianz Life Insurance Co, and an overwhelming 92% of respondents to the survey said there is a retirement crisis in the United States.  Amongst baby boomers the number rose to 97%.  So here you have a massive number of people at the doorstep of retirement feeling like they are not ready to pass through into the next chapter of life.

What are the majority of people doing about it? And what can you do about it? Well there is a lot of information online that can help serve as a starting point on investing, and has perhaps led many investors to think they can handle everything on their own just by searching around the web.

According to the Allianz survey approximately 46% of Boomers currently work with a financial advisor. There were 29% who said they are receptive to advisors. But a quarter of the respondents said they don’t have a financial advisor and are not open to working with one. Among those who are working with an advisor, 44% said they should have learned more about building a solid financial plan.

So what do pre-retirees want from their financial advisor when working with one? Here’s a shocker, 87% said that ensuring the safety of their nest egg was “very” or “extremely” important and another 86% said that locking in a guaranteed income was “very” or “extremely” important.

Katie Libbe, vice president of consumer marketing and solutions for Allianz Life Insurance Co. said that annuities are essentially the only option that can provide guarantee income for life. The only problem, of course, is that annuities have a reputation for being difficult for the average individual investor to understand. Which means that advisors need to be certain they are properly explaining the various parts of an annuity to their clients, while the quarter of boomers who said they are not open to working with an advisor might want to reconsider that stance.

“They can be complex so we usually believe it’s best to have an advisor look at these options and explain them to the individual,” Libbe said. “They can actually be complex in a good way. They don’t just provide a steady stream, they also increase income. But it starts with the advisors so they can easily be understood.”

Closing notes from Finish Line:

When working with potential clients it is not unrealistic that we meet 3 and 4 times in order to ensure the client understands the annuity clearly. Especially when working with a guaranteed income rider. The first meeting is generally focused on gathering information about what might be important to the client, and introducing the different concepts. Educating our clients is our primary strength and one of the reasons our clients continue to recommend our services.  Let us know what we can do for you.

Survey Results – Boomer’s concerns about retirement

ING has just released a new esubmit application process that we have decided to adopt as standard practice while writing their policies. This new program allows agents to sell simple term life insurance policies completely online. Once the agent and client have decided on a term insurance program that they would like, the agent goes online to ING’s website and the application can be filled out 100% electronically. This process included electronic signatures as well. There is virtually no paper needed during any step.

ING does give the option to print out any of the forms used in the process, in case the client would like to keep a paper trail. We like this! Going green is good, but having the option to go one way or another is even better.

This is just another tool that we support, in doing our part to be efficient in our business while being conscientious of our environment. If you would like to review your policy versus a new ING policy, we would happy to compare those numbers for you.

Fill out our form!

The GLIR was first made available to Variable Annuities, and it has become a “must have” add-on for most index annuity products. The GLIR is growing at an incredible rate at the number of applications Life insurance companies are receiving.

For example: Life Insurance Company Southwest (LSW) has received an astounding increase regarding the rider for its deferred indexed annuity. The company reported receiving 270 GLIR applications in a single day back in February of 2008. The average number of applications the company usually receives per day is anywhere from 100 to 150.

Why is this? And more importantly how does the GLIR work?  One attractive advantage of this rider is that agents can present a dollar amount for the guaranteed payout for life. We as agents don’t have to speculate your income. We can give you guaranteed numbers that will never go down or go away. Real Lifetime Income!

To calculate the guaranteed withdrawal payment, many agents will multiply a guaranteed withdrawal percentage by the income account. The income account has a guaranteed interest rate for a specific time period. An example of this is a 7.2% roll-up rate guaranteed for 20 years.

We find that the guaranteed withdrawal percentage is based on the age the client wants to begin receiving payments. For example, if the guaranteed withdrawal percentage is 5% at age 60, yet increases by 0.10% each year, the guaranteed withdrawal percentage will be 8% by age 90.

For you couples, here is another example: a married couple can purchase a single premium deferred indexed annuity, with a Joint Life GLIR for $400,000 at age 55.

At age 65 they would receive to an income of approximately $40K each year. This income would be guaranteed for life even if the contract’s value decreases to zero over time due to the number of income payments. Although, if they decide to receive income payments starting at age 70, their annual guaranteed lifetime income would be roughly $62K.

So I do hope this helps you understand the value that this rider holds to many existing clients. Please feel free to call or email me with any questions regarding annuities and income riders. I will be happy to help you. If you are interested in getting annuity quotes for yourself I do have a new form you can fill out and I will send you competitive quotes within 48 hours. Annuity Quote Request Form

Lifetime Income Riders Revealed!

A study which examined the investment of millions of dollars by life insurance companies was conducted by Harvard Medical School. These companies included such names as Burger King, McDonald’s, Wendy’s, ect.

Some experts are making the argument that investments into such companies are inappropriate, since eating in fast food restaurants is generally perceived to be unhealthy. There view is that life insurance companies should promote healthy living.

But the criticism being raised misses an important point I think. Here is my personal angle on this one – life insurance companies are also investment vehicles, and it is in the best interest of their clients that these investments do well.

I remind my Sacramento clients that most life insurance investment products are not designed to beat the interest rates in the market. They are designed to beat the interest rates that your local bank offers.

The main difference between permanent insurance and term is that permanent insurance offers a standard death benefit plus an investment portfolio. Stay with me here. Sure, fast food is often unhealthy, and the primary concern for all insurance companies ought to be the well-being of their policy holders, but sometimes the definition of well-being depends on the services being rendered.

Millions of policy-holders depend on their permanent insurance investments to pay off in the event of their death. Choosing those investments that offer high quality returns is what insurance companies are being paid to do.

So there is your answer in my opinion, fast food is often bad for your health. Enjoying the financial rewards of a life insurance company that knows how to make sound investments, such as a fast food company, can be very good take away.

Would you like French Fry’s with your Cash Value?

Many policy holders in California have been receiving letters in the mail from their insurance providers stating that their whole life policy has run out of gas and needs more premium payments to stay in force.

Most policy holders are shocked to see this due to the fact that when they were sold the policy, they were told it would last forever as long as it was funded with X amount of dollars. They were told “If you pay a certain amount up front, you can stop paying at age 65 and the insurance will last the rest of your life”. Hence the name “Whole Life Paid Up”.

So why are policy holders now getting letters in the mail saying that they are no longer paid up? Well back in the day of trusting social security checks and well built homes with big backyards, interest rates used to flow strong like an Alaskan Salmon fishing run in the middle of July. What I mean is that these clients were quoted premium prices based on interest rates as high as 12-14%.

Now we Californians are looking at our future where the market average is lucky to see between 5-7%. There’s just not enough gas in the engine anymore to support older insurance products. It’s like trying to hang on to your big Ford truck with the Flat head V8 engine and still only spend $30 a month in gas. Sorry for all the grizzly man metaphors but I had to get that one out. Point is, you need a more efficient insurance vehicle.

So is there a solution?

Yes! There are now Universal Life policies can be structured to work on much less money and still provide the same amount of insurance. In fact insurance providers will also include premium guarantees that make sure the policy’s cost will never raise nor fall regardless of a fluctuating market.

Let me give you an example, earlier this year I met a 66 year old gentleman who had a $100,000 Whole Life policy through major insurance provider. I can’t tell you the name but it rhymed with Zoo Fork Life. Anyhow he had roughly $30K of cash value and his monthly premiums were over $130 per month. He called me when his wife discovered that the quarterly statement showed his policy would lapse at age 81 given its current status.

This couple told me they had no reason to pull out the cash but they needed to make sure the insurance was guaranteed forever. They had funded this policy for so many years, the idea of being left with nothing was no acceptable.

So we shopped for a better insurance vehicle and found that we could rescue all the cash that they had built up over the years for a much better future.

It turns out we moved the cash over to a brand new $100,000 Universal Life policy with a different insurance carrier using a 1035 exchange. The monthly premiums decreased to less than $50 per month and the new policy guaranteed that neither the premium nor the face amount of the policy would change, for life.  The client is now saving $50+ per month and has his insurance secure for the rest of his life.

This example is one of many that I’ve done and am currently working on. The reason that I am writing this blog is simply to warn policy holders that if you have not looked at the health of your whole life policy in the last 5 years, it is time.

What do you need to have in order to examine the health of a whole life policy?

You need to call your insurance company, and request an “InForce Ledger”. This will take a snap shot at where your policy stands, and how long it will last, based of current cash value, premiums, and current interest rates. Lastly you need a trustworthy agent from to give you a non bias opinion of whether you policy’s health is in good standing.

Lets have a look at your Whole Life policy! Set up an Appointment.

Read Part II : Stay tuned for my next blog, it gives an example of using a Fixed Annuity to rescue your Cash Value when life insurance is not an option.

A similar 2006 survey found that 58% of organizations allowed high contribution levels for their employees. The IRS currently permits people to contribute a maximum amount  to their 401(k) of $16,500 each year. For people who are age 50 or older, the additional catch-up contribution is an additional $5,500, for a total maximum limit of $22,000 a year.

This most recent survey of 401(k) practices found that 68% of employers allow employees to contribute 25% or more of their wages to their 401(k) program, according to marketing research company Business and Legal Resources.

The survey concluded that 22% of employers do not match 401(k) contributions at all, 32% match between 2% and 4% of wages, and 33% match up to 6% of wages. Among the organizations that match 401(k) contributions, 59% reported they match at least 50 cents on the dollar.

If you are in a position where your employer is limiting your ability to invest in your own retirement and future, call us for alternative investment strategies.

401K Comparison Blog

Request Annuity Illustration

and read this article:

http://www.financial-planning.com/news/hewitt-retirement-beebe-2666768-1.html?ET=financialplanning:e1462:1898045a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=FP_Daily_050510

Many of the existing retirement savings programs which are seen as standard in our market today have funding limitations. For example, business owners and highly compensated executives with a standalone 401(k) plan are limited to only 2% additional contribution above the eligible “rank and file” employees. This is unless the business elects a Safe Harbor. The Safe Harbor requires that for all eligible employees, a 3% of compensation contribution by the employer be made which has an immediate 100% vesting. As a business owner this law can be very costly. Moreover it only has a maximum contribution of $16,500 for 2009, and has not been found to help retain key employees.

There is hope! Did you know that adding a nonqualified plan to a business retirement program offers additional ways for business owners, executives, and individuals to save up for retirement. This eliminates the need to fight limitations and restrictions placed on qualified 401(k) plan contributions. Depending on the type of options selected, you can take advantage of tax benefits unavailable with other savings and investment plans.

Qualified retirement plans have limits that a properly designed nonqualified executive benefit plan helps reduce. It gives employers the ability to tailor a plan to meet the needs of the company. The plan participants are completely at the discretion of the business owner:

Benefits to non-qualified funding includes:

• Not subject to ERISA contribution and participation limits
• Certain tax advantages or financial benefits can apply, depending on plan type and financing options
• Simplified government reporting may or may not apply depending on the design and/or size of the company.
• Increases the ability to recruit top talent by building the attractiveness of the company’s benefits package
• Encourages loyalty among employees and helps secure the company executives’ financial futures
• Helps provide additional opportunities to reward the employees financially, based on the structure of the nonqualified plan

In an attempt to not give false hope to folks who have diabetes, we prefer to be clear and to the point with the stipulations surrounding our find. What we found was that when a person is diagnosed as having diabetes later in life, the condition is less life threatening and therefore favorable to insurance companies.

In short, “The Later the Better”. Some one who has been diagnosed as a child is at far more risk than someone who is diagnosed in their sixties, insulin dependent or not.

Most life insurance agents run out the door when they are confronted with someone who in insulin dependent. We want those of you out there to know that this is a common mistake and we are happy to help you get affordable coverage. We recommend specific carriers that specialize in these this particular field and we know that you will find the insurance to be affordable.

This is another situation in the life insurance industry where certain carriers have decided to be competitive with a niche market. We research these carriers in order to provide you with better service and a voice of understanding.

Get Started!

Insulin Dependent Diabetes – Why a late onset diagnosis is still insurable.

Good New!

New application processes have recently been released in order to encourage change in the life insurance industry. Companies such as Quick Life have created agent support systems that allow a Life Insurance Agent to not only collect a Life Insurance Application from their client over the internet but they don’t even require any signatures. These new “web apps” allow for data to transfer to the insurance company much faster, clearer and at less cost. Wait! Did I just say clearer? Yes I did. Did you know that most life insurance companies still receive 75% of their applications by fax? It’s fair enough to say that this trillion dollar industry needs a major overhaul. These types of processes are determined to affect the insurance company’s bottom line, and when they save money, you save money. In fact life insurance prices have dropped considerably over the last eight years, so if you haven’t compared your ten year old term policy lately, maybe you should.

Policy holders also have an option that is becoming more popular as it is offered, the “Paperless Policy”. Jackson National life is one company who has expressed an interest in offering their clients an option to access their policy online via private and secure web page. Each policy receives his/her own web address and security access information.

We see that the current methods of collecting life insurance applications and paper packed policies is coming to an end. Quite frankly, we are glad. As an agency Finish Line Insurance Services has already begun utilizing these new “web apps” and is happy to offer you the option of a “soft policy” from your insurance carrier. At the end of the day having systems like these in place help save you, us, and your insurance carrier a good deal of money. If we can all save money and help the planet stay green, we encourage it.

Thanks for reading.

1.         “Are you a full time agent?”

Due to agent commissions being reduced and expenses rising, it is becoming increasingly more difficult for agents to maintain a business office and overhead expenses. Some agents are forced to operate out of their “spare bedroom” and work a second job to make ends meet. You wouldn’t want to go to a part-time doctor so why would you use a part-time agent? Make sure the agent you are speaking with is stable and not “desperate” to make a sale. You deserve a competent, well-established agent.

2.         “Do you have errors and omission insurance?”

Reputable insurance agents carry errors and omissions insurance that will help protect themselves and the client in the event of a wrongful act or misrepresentation by the agent. You should make sure they have a policy with a face amount of at least $500K.

3.         “What area of life insurance is your specialty?”

There are many products an insurance agent can offer other than standard life insurance. These products include disability income protection, long term care insurance, Annuities or Retirement vehicles.  Make sure the agent you are speaking with fully understands the products you’re after and how they relate to your needs.

4.         “How accessible are you?”

The Internet has made shopping for many types of products as easy as clicking a mouse. Life insurance is no exception; there are many life insurance companies that assume you will go to their Web site, click the policy you want and pay. There are consumers who prefer to do business this way. But if you are a not one of them, make sure you select a life agent who shares your views on the importance of personal attention.

5.         “How often will we talk?”

Many policyholders believe that buying a life insurance policy is a once-and-done deal. The reality is that your life insurance needs change as your life changes; getting married, having a new baby, earning a big promotion or buying a big home can require changes in your policy. You will not always remember to call your agent every time there is a significant change in your life. An agent who will periodically assist in evaluating your needs could be a blessing, especially if he or she initiates the contact.

6.         “What companies do you represent?”

Asking this question is important for several reasons. First, an agent who has access to several different insurance companies will be able to shop for you – more choices means more opportunities for better terms, premiums, etc. In addition, knowing what companies your agent will go to for coverage can help you determine the financial strength and integrity of the company before the policy is offered. There are several insurance company rating services available to research this information as well as your state’s insurance department. And, by all means, question any agent who suggests placing your business with a financially unstable insurance company. Lastly, a greater selection of products may give your agent the tools he or she needs to always act in your best interest, even as your needs change over time.

7.         “What other services do you provide?”

This question can really go either way. You either are looking for a specialist that works closely with the life insurance product you are shopping for, or you want one person who can handle your laundry list of needs. Personally I tend to think that it’s better to go with an independent agent who is a specialist in a particular field. This way the agent is not held to one company and but they work with specific products that they know inside and out.

8.         “Is my policy convertible? Up to what age?”

Know whether your policy is convertible and for how long. Your policy likely has a conversion clause. That’s the line on your agreement that discusses how you may exchange your renewable term policy for another type of policy without evidence of insurability. You want to find out how for how many years your policy is convertible. And if your policy is convertible, you want to make sure you know and understand the rules.

9.           “How do I make a claim if I need to?”

Finally, know what you need to do to make a claim on the policy. Make sure it’s clearly written on your policy whom you contact and under what time guidelines you’re required to act. Also, become aware of what options the insurance company has when you make a claim. Learn how long the company has to respond to your claim.

10. “Why do you feel this product is in my best interests?”

This question will quickly drive out whether or not your agent was listening to your needs in the first place. The simple answer to this question should first state what you asked for and then address how this policy fulfills those needs.

This video is a great approach to using life insurance as an investment tool. From the way the they explain the conservative interest rates to the percentage of a clients portfolio, I was happy to see some sensible discussion regarding the topic.

Life Insurance has other applications that can be beneficial to your mortgage as well. When using Permanent Life Insurance the cash value element that grows tax-deferred within the policy can be used in multiple ways. This account of cash value may be accessed through policy loans and withdrawals that can be used for a variety of living needs, such as paying off a mortgage early.

Here’s how:

Many insurance companies offer a number of loan provisions including variable and standard interest loans. There is a specific loan available with some companies that will allow the client to receive a guaranteed net zero cost loan, which is available after the policy has been in force for a certain amount of time. In some cases, this type of loan can be accessible as soon as five years into the policy’s life.  The advantage is that the loan charges and credits the same amount of interest, zero.  Meaning you pay a net zero percent interest rate and are under no obligation to repay the loan. If you do not pay the loan back, the amount of the loan is simply deducted from the death benefit of the policy.  This benefit loan provision can easily be worked into a family’s over all Financial Plan, it is also one more way you can allow your life insurance to work for you while you are alive. Have questions? Contact Us

Early Mortgage Payoff with Life Insurance at 0% Interest

Many companies have been raising their premiums and/or canceling some of their longer term policy programs such as 30 year term policies. According to Barney, though a number of companies have recently increased their premiums, a number of them have not yet done so. The result is that right now it makes sense for consumers to do some comparison shopping today.

It is important to notice that, the insurance companies cannot increase your monthly premiums as long as you have a term policy with guaranteed premiums. Only newly issued policies are subject to the premium increase.

Some companies announce the increases in their premiums as to give agents some time to allow outstanding applications be submitted before the deadline dates are established. If you are currently evaluating the purchase of a new life insurance policy, or if you are currently shopping for quotes, be sure to ask your life agent if the monthly rates are subject to change soon. If so, do not hesitate to submit your applications before the cut off date. This is so that you don’t receive your approval with a higher premium than what you were originally quoted only one month prior, no one likes surprises that last 20 – 30 years.

Life Insurance Price Changes

Here’s why:

One of the first advantages of opening a Universal life insurance policy for a child is that the insurance cost is favorably low. Most children can receive policies in the amount of $50,000 or more for less than $30 per month. That’s permanent insurance, not term. The death benefit is of course protection for you in the case that your child passes away unexpectedly. Yet there are many advantages to him/her by using the insurance as a form of savings account. Did you know that a life insurance policy is the only sheltered savings vehicle that is not considered in the formula when requesting for student financial aid by the state of California?

Universal life in its nature has a cash value account that grows right beside the bucket of insurance as time passes and premiums are paid. The investment is at its best due to the young age of the insured. These moneys are accessible tax free and have no age restriction for drawing on the account. Surrender penalties are on a sliding scale that will usually be at zero by year 15 of the policy. Just about the time your child is ready to make some of the larger purchases in his/her life, you as the parent can’t grant them ownership of the policy.

Your child will see first hand what a good savings plan can do over time.  He or She can make the decision on whether it’s wise to spend the money on a car or house, college or trade school, or maybe roll the fund over into non-qualified IRA account. Of course they also have the decision to just continue funding the policy and watch the account grow just as you did for them.

You see a Universal Life Insurance policy for a young person can be a very valuable asset and a very valuable lesson in saving money. Should you look into it for your children? Call us today to set up an appointment to sit down with you. We have programs of all types and are ready to match a plan to your comfort level and time horizon.

Life Insurance for Children

In our industry many folks who look for what we call Guaranteed Issue life Insurance policies are headed down that particular road for a reason. They either have a preexisting condition or have something in their past disqualifies them from a Non-Guaranteed policy (NG).

Most of the public does not realize the enormous difference in cost between the policy types. Did you know there are three types of basic structure when referring to risk classifications with life insurance? First there is Non Guaranteed (This type of policy requires a detailed list of medical questions be asked along with an exam that includes a urine and blood sample). Second is Simple Issue (This type of policy asks a less detailed list of medical questions but does not require an exam, although the insurance company will pull medical history records if there are any red flags on the application). Lastly Guaranteed Issue policies (These types of policies do not require an exam or any medical questions to be asked, you simply pay the premium and receive the insurance).

What does this mean with regards to your pocketbook, well you see the more an insurance company is allowed to know about you, the more they can accurately gauge you as a potential risk. The non-guaranteed plan allows the insurance company full disclosure of ever aspect of your life and therefore if approved, you stand to receive the most cost effective life insurance policy. The Simple Issue policy is the second runner up, it is not as popular as the NG because not many carriers offer it but it is certainly priced more competitively than the guaranteed Issue. Once more the Simple Issue policies can be issued to the insured as quickly as 48 hours.

Basically a guaranteed issue policy holds the best value when the insured lives past two years from the time of issue but less than ten. The premiums to these policies are very high in cost and will normally not pay the entire death benefit until after the policy reaches two years in maturity. Prior to that point, if the insured were to pass away the premiums would be refunded in full, including a marginal interest rate close to around 5%.

Ok so now to give you some of the finer points to watch out for in making sure you pick the product right for you. First, if for any particular reason you feel that you may not be accepted by an insurance provider when applying for a non-guaranteed plan call us immediately. During the time your policy is in underwriting you may be able to apply with other companies that better suit your circumstances and you will not have a Decline on your MIB report. This is crucial.

If you have a preexisting condition and you still want to apply with a non-guaranteed issue policy than you need to realize that not all underwriting amongst companies is the same. There are certain companies that are much, much, more flexible than others, when they are considering your specific circumstances and health issues. This could result in an unnecessary decline or in the savings of thousands of dollars. I mean it, thousands.

The reason I right this is because I have met so many people who do not know that Simple Issue policies exist and they throw away hundreds of dollars a month on guaranteed issue policies. Moreover people qualify for non-guaranteed issue policy but the company they are with holds them in a higher risk class than they could be offered with a different company.

We have specific companies that we have found to be more flexible when referring to certain categories. I have listed off a few below to show some of the topics in which we have been able to help people find more competitive pricing and policies they can be happy with.
1. Obesity
2. Tobacco chewers and cigar smokers
3. Drug Rehabilitation
4. Resent Gastric Bypass Surgery
5. Insuring between ages 80-85

Now most of the time these Simple issue and Guaranteed Issue policies are for people who have seen some health issues or had a circumstance in their life that prevents them from receiving a non-guaranteed life insurance policy. That is why you should contact us for advice before applying for a life insurance policy with an agent that may not have the experience we do. Thank you for reading.

Guaranteed Issue Life Insurance vs. Simple Issue Life Insurance

What are these ratings?

All insurance providers allow themselves to be rated by major analysis Corporations like Standard & Poor’s, Moody’s, Fitch, and A.M. Best. These Corporations give Insurance providers letter grades which are a public opinion as to the current status of the provider. They go off a strict and detailed list examining the financial strengths, investment portfolio, customer service and ability to meet the obligations made to clients (policy holders). Needless to say, it looks good for the insurance carriers when they receive a good rate class from these companies.

Because of this, what has happened is the rating providers have come up with subtle levels of ratings for each letter grade, so as to not mark any insurance company too low unless necessary. You see, you don’t want to upset a multi-billion dollar insurance provider. As a result of this relationship, a company who deserves to have a rating four degrees of separation below their potential still receives a form of “A” rate class.

For example: Standard and Poor’s currently have 7 degrees of separation in their A category. So when an insurance agent tells you that the insurance company he presents is A+ rated, you should ask him/her back “Which rating company are you looking at?”

A.M. Best considers an A+ to be Superior and it is their second highest class. Standard and Poor’s has an A+ rate as their 5^th highest class. This mark would be even to a B++ with A.M Best. So you must make sure that you have your facts straight and your companies in order. Just saying that a company is A+ is not good enough.

Life Insurance Company Ratings A+ or not A+

Let’s take our old forgotten friend “Joe the plumber” and let’s say that Joe has four young plumbers working under him. Joe’s business is going well, his bills are being paid, and he currently has a wife and two kids.  Sound familiar?

Now Joe is in a bit of a difficult situation because he wants to put a retirement account together for himself and his family. He has looked at setting up a 401K through his business but he didn’t know that he legally has to make contributions for his employees. In fact his contributions are regulated by how much they can contribute out of each pay check, so he sees himself being very limited. His employees are young and not as organized, only two of them are able to put money into a retirement account at all, if one was set up.

Joe’s combined household income is too high to open an IRA, but even if it wasn’t, Joe would like to be able to contribute more than $5,000 per year when possible. So there is a painted picture of Joe and though it might be slightly different from you, the principals remain the same.

Many business owners face retirement situations like Joe. They want to have the ability to put money away without being tied to a bunch of regulations and tax law.

There is a product in this case which can be very effective for both you and Joe.

It has been found that when set up properly, an Equity Index Universal Life Insurance policy can satisfy these needs and provide a unique income tax shelter for retirement years.

How? First off let’s be honest and clear about underwriting in regards to life insurance. If you smoke or have a serious health condition, this product will probably not be in your best interests.

If you are 55 years old or less and in good health then by all means, read on! Here is how it works:  We (the agency) design the insurance plan around the monthly amount you can contribute toward your retirement fund. The insurance amount is secondary and is just a vehicle for tax shelter.

There is a tax law that is over 100 years old, that gives this program its defining attribute. It allows the insured (you) to put moneys into the insurance policy, not to exceed the face amount of insurance. Ok! Our logic as agents is that we simply max out the insurance policy. So the money you put in is carrying the “least amount of insurance cost as possible” and therefore allowing the “excess funds” to grow aggressively.

Let’s take a quick break to understand the pros and cons of a product like this:

Pros:

1. You don’t have to contribute towards your employees retirement (saved money)
2. You don’t have any age 59 ½ restrictions on getting the money (life insurance attribute)
3. You can pick how the money is allocated just like a traditional investment. (Variable, Index, or Fixed)
4. If you die your survivors receive the insurance (always greater than the amount you invested in the first place)
5. The income when you pull it out is completely tax free. ( As long as you stay within the tax guideline)

Sound pretty good!  The premiums are flexible from month to month, or year to year. So you can pull back if things get tight financially, but when you have a surplus of funds you can also increase your deposit.

What should you know about this product?

Cons:

1. There is a cost of insurance associated in the investment (it’s less than contribution in a 401K, much less!!!) (if you are not very healthy we should compare other products)
2. If you make an early withdraw in the first few years are you at risk? (yes, this is a long-term investment, with certain surrender penalties) (always ask about penalties)
3. If you need to roll the money over to another company you can (Oh wait, that’s a pro

Also, make sure that this account is not your emergency money, this is a retirement fund, not a 5 year cd. The average retirement fund takes 20 years to mature properly. So do your homework.

And secondly, knowing how the product works in tune with the insurance is imperative. The healthier you are and the longer you let this product grow, the better it will do for you.  The nuts and bolts are this: Most of the clients we set up on this program receive all the life insurance they ever needed. They end up pulling out 5-8 times what they put into the program. Lastly, its all tax free income during retirement, so you never have to pay a dollar to Uncle Sam.

In closing, most business owners have not seen this approach to retirement planning and I felt it necessary to give an overview of how we like to address it. Of course if you have any questions, or if you would like me to forecast this for you beside another investment you have, I’d be happy to. Request an Illustration

If anyone who uses tobacco products has ever shopped around for life insurance they are now aware that the two don’t exactly go hand in hand. Most of the time companies will double the monthly premium of a simple term insurance plan for someone who uses tobacco products vs. someone who does not.

For Example: a 20 year Term Insurance policy with a face amount of $500K for a guy like me (31 year old, pale, skinny white boy) would run roughly $25 dollars per month. I gave myself a Preferred Plus health class. Now! If I was a smoker and ran the numbers for that very same scenario, the least expensive program out in the market is $69 per month, the median is roughly $80 per month. So you now see that smoking is costly, not even considering that a pack a day smoker spends $120+ per month on their habit.

Now you may say to me, “Brian I chew tobacco, but I don’t smoke.” Unfortunately for 99% of insurance companies out there, you are labeled as a “Smoker” regardless of your habit.  If tobacco is in your blood stream when the examiner takes your draw, you will be seen as a smoker. That goes for a once a week cigar, and weekend chew at the baseball game, or two packs per day smelling like an ash tray, they are all deemed “tobacco”.

Here is some light though. I have issued policies for many smokers and non smoking tobacco users over the years. There are some companies who offer underwriting guidelines that work in your favor.  Did you know,  is that there is a company that gives non smoking rates to people who chew tobacco. If you apply to this company and list that you chew tobacco they will happily issue you a Standard Plus Non-Tobacco health class, assuming your in good health of course.  Also…….”No I will not right down chewing tobacco if I know that you smoke.” This also goes for Cigar smokers and people on the nicotine patch, you too can receive a non-tobacco rate class, call me.

Look at the cost savings between the two health classes. In the example above, we just dropped your premium from $80 to $48 per month with the Standard-Non-Tobacco health class. Oh and if you want to apply to this company you need to contact me directly, I don’t just hand pearls out you know!

Now, for you cigarette smokers out there, there is still some light at the end of the tunnel.  There are two companies in the industry that are competing to corner the market in offering rates much lower than every other insurance company out there to smokers. Their prices in nearly every scenario I have ran, have been side by side dead even in cost. Both companies are reputable and both have A ratings from A.M Best. Who are they? Call me.

If you smoke and need life insurance I feel it is certainly in your best interests to apply to one, if not both of these companies. If you do the business through me, I can have applications sent to both carriers and have you take only one exam. That way you will have both offers on the table when the results come in and you don’t have to get pricked in the arm twice. These companies offer smokers a rate that is on average 15% less than any other carrier out there. Note: they will still give you a tobacco rate, its just cheaper than other companies for the same amount of insurance. In closing, whether you are a smoker, chewer, or have recently quit smoking, I have the experience to recommend solid advice and companies who are competitive for your situation. This advice will save you money, period.

Thanks for reading.

Life insurance for Tobacco users

Some people say that you should take ten times your annual income to calculate the policy amount. Some use other formulas to figure the number that best suits them.

Today I’d like to talk about the how much life insurance is adequate for a typical young family,

and I’ll give you some tools to logically calculate your own policy amount. First of all let describe the hypothetical family we want to work with.  Let’s say you are a first time life insurance shopper in your late twenty’s, married, with a toddler and another child on the way. How much insurance do you believe is necessary in case tomorrow you don’t come home from work?

We should also say that you work hard for your $50K annual income and the monthly premium is a sensitive subject once all the other bills are paid. You have a mortgage of $350K and two vehicle loans totaling $30K conservatively. There is a small credit card with about $4000 on it and an old student loan with $10K left to be paid. This scenario is very common for most young families. At this point we have calculated up just under $395K of existing debt to be paid.

Now let’s identify what takes place over the next 3 years, a very limited forecast to show immediate needs. First things first, you need to be buried and your family would like a standard memorial service, $15K. Your spouse needs to replace your income for at least the next 2 years to raise the new baby, (assuming you’re the husband), and she could certainly use some help with the toddler once a week for the next twelve months until things adjust, $125K. Mom is smart and wants to start a small fund in each of the children’s names to start putting away for college, $10K each is a minimum should take them to any in-state school they need to go. With that it should grow to $50K by the time they reach age 20.

So now that we have discovered that a $500K policy can easily be spent and gone in less than one year on necessities alone, let me ask you again. How much life insurance do you really need? The reality is that no one wants to become super mom or super dad if their spouse passes away pre-maturely. To work full time and raise children is not anyone’s idea of a good time. Maintaining the quality of life you had while you were raising a family as a couple is what you should seek when deciding on a reasonable and adequate life insurance policy amount.  Everyone’s numbers are different and there is no “cookie cutter” answer.

In the scenario I just described, I would recommend the client acquire at least a $650K policy in order to obtain a secure piece of mind for the family’s future.  I really just wanted to write this in order to get you thinking of some of the numbers that become reality when a loved one passes away. This is one of the many conversations I have with my clients when they ask me for life insurance policies. If you would like to discuss how much insurance you feel is appropriate for you, or you would like to change the amount you currently have, please contact us.

How much Life Insurance do I need?

Most websites that have the word “Quote” or “Quote’s” in the name, are selling the information you fill out to sales agents. Most shoppers want a list of quotes to be emailed to them when they fill out the simple online form so they can review the quotes in peace without feeling pressured by an agent. Little do they know that the personal information they filled out in the form is then sold to as many as ten different insurance salespeople. The salespeople then call the shopper in the attempt to earn their business. So within 24 hours they receive as many as ten phone calls from ten different agents all claiming to have the best products. This can be very overwhelming and it’s our experience that most potential insurance buyers are not pleased with the experience.

If you are able to find an insurance carrier who you think you may want to contact, make sure you know what company they represent. The reason being is this: If you call up an agent who only sells brand X insurance, (a captive agent) than they can only recommend that you buy brand X insurance. Captive agents may have a bias opinion when giving their recommendation, and may not be looking out for your best interests. Examples of captive agent companies are; State Farm, New York Life, and All State. These are all decent companies who have their place in the industry. Just know that the agents whom sell their products are not allowed to sell outside of that company. It’s fair to say moral character may get in the way when addressing the question “Is this really what’s best for my needs?”

If you go to an independent agent who sells multiple lines of insurance, you have a better chance of finding a non-bias agent. Due to having a wider selection of products to choose from they will have a better chance of fitting the product to your need vs. fitting your need into their box of their products. You should shop the captive agent salespeople as well, but realize going into the conversation that if they find themselves not having the best product they may still push the sale which inevitably is a compromise of moral character. Personally, that is why I became an independent agent, so I never need to find myself in that situation.

Lastly when looking at insurance companies there are certain criteria we recommend you adopt as your own. We recommend you only do business with companies who have been around at least 100 years. This proves that the company has positioned themselves to weather any economic storm that may lie ahead. Secondly, work with companies who have at least an A+ rating from A.M .Best   A.M. Best is a large third party independent reporting and rating company that rates an insurance company on the basis of the company’s financial strength, operating performance, and ability to meet its obligations to contract holders. (A+ is the second highest rating out of 15.) Lastly the customer service you find from both the agent and the company itself are very important. We encourage you to call the company up and see how long it takes you to reach a real person to speak with.

Think of it this way, if something were to happen to you, how much trouble would it be for your significant other to handle the insurance claim?

Online Insurance Shopping