Tag: Protecting Your Business

Declined for Life Insurance

How To Recover from a Decline

Getting declined for life insurance is very serious

While a decline doesn’t necessarily mean an insurance company believes you are going to die very soon, it does mean they have concerns about your statistical life expectancy or personal history, or activities. And a decline by one insurance company can generally be seen by other insurers. So a decline “on your record” might just make it that much harder for you to be seen positively by another company.  So let’s talk about how to avoid a decline as best as possible.

Working with an experienced life insurance agent is crucial

If you have known health issues, chronic or otherwise, engage in potentially dangerous activities, or have a personal history that involves trouble with the law, you may find yourself an unacceptable risk to many insurance companies, and therefore a candidate for a decline. Does this mean you shouldn’t try to get coverage?  Well no, not without consulting an agent who is experienced and knowledgeable and who can first assess your potential “problems”, speak to underwriters about the information they need to make an informed decision, and then follow through to present the best and most accurate information possible to the underwriters. 

Many times it is incomplete, or even erroneous information about a prospective insured that leads underwriters to decline an application. Unfortunately, blame can usually be shared by an agent’s inexperience to ask the right follow-up questions, and an applicant’s attempt to tell the most favorable story about themselves that they can.  

So when you get declined you, here’s what you need to do:  
  • Write to the company representative who sent you the decline letter, and ask for specifics about why you were declined.
  • Follow-up with your agent when you hear from the company that declined you.
What can usually be fixed:
  • Erroneous information in a medical record.
  • Personal history that has not been updated.
  • Personal history that is not yours.
  • Incorrect information on the application.

If you have been declined and don’t think there is any hope in being issued a policy by any company, you should speak with one of our affiliated agents and get an understanding of what other options may be available.

life insurance for your business

Keyman Coverage

How term insurance can protect your business

Term insurance can protect a business, its’ owners, and management in a variety of ways.

Keyman coverage with life insurance is generally a life insurance policy that is owned by a business entity, which gives that business the life insurance proceeds upon the passing of a keyman in the business, for the purposes which include: giving the business time to find and hire a replacement, keeping creditors satisfied that the business has enough operating capital in a time when there may be grave concerns about the business’ future and the debt the business may be carrying, and pay-off any accrued compensation owed to the keyman’s estate. 

The policy design of this type of coverage is more complex than an individual owning his own coverage for his family’s protection. An experienced life insurance professional should be sought to make sure the policy structure achieves the desired goal for the need. There may also be issues around taxation and tax deductability of premiums or proceeds. 

life insurance for executives

Buy-Sell Arrangements

How to use term insurance to protect your business in buy-sell arrangements

A buy-sell arrangement is a formal contract between parties that have, or could have, an interest in a business. These arrangements are generally designed by attorneys to suit the specific needs and goals of the interested parties. Many times, should a provision of the arrangement be triggered by the death of an owner, partner, shareholder, or otherwise, the life insurance death benefit on the individual who passed away, is used to buy-out that person’s interest in the business.

These arrangements can be fairly complex when it comes to designing the life insurance coverage and “funding” the arrangement with life insurance proceeds, as there are several ways the coverage can be structured, depending on a variety of factors, including how many interested parties there are involved, the funding structure of the policies, the beneficiary designations, the need to be able to change insureds as the interested parties change over the years, and so on.

life insurance as executive bonus

Executive Bonus/Golden Handcuffs

Whole life insurance can be a great executive bonus to help your your business attract and retain top talent

Using a life insurance policy as an executive bonus arrangement and/or as “Golden Handcuffs” is a great way to have a have a discriminant method of offering a bonus to select individuals .  The purpose is of course to attract and retain top talent in your business.  By offering a life insurance policy as part of their employment contract, you provide a valuable benefit that can be contractually restricted over a certain period of time — a time period you define in the arrangement agreement.   

A built-in, self-vesting schedule of the available cash-value within the policy which should increase over time makes the life insurance policy more valuable over time and harder for the executive to walk away from.   Any other timed restrictions that were agreed upon at the time of the arrangement contribute to making this a great enticement tool — thus being like “Golden Handcuffs” — keeping them personally financially invested in your business.   

Getting Roth IRA style benefits from a whole life insurance policy

Generally speaking, this type of arrangement can also be very attractive because the possibility of the cash-value growth being tax-deferred, and the eventual tax-free use of the cash-value within the life insurance policy.  This creates a scenario  that mimics the tax advantages of a ROTH IRA but without any of the income, earnings, or contribution limitations. 

Life insurance policy design is critical

For these type of strategies, permanent cash-value insurance is required, and the type of policies, and the policy design are crucial. As with any financial strategy using life insurance, an experienced life insurance professional should be sought to make sure the policy structure achieves the desired goal.

life insurance for newborn

How To Buy Term Life Insurance

Deciding which life insurance company to choose

Buying term insurance doesn’t have to be complicated, but it isn’t as simple as getting the best quote. Term life insurance [aka “temporary insurance”] like all life insurance, is a contract between the policy-owner (usually the insured) and the insurance company.

The first thing a consumer must keep in mind, is that the company they choose may be apart of their financial life for up to 30 years. This is a very long time in the business sense, as a company’s financial situation could change dramatically over that period of time, also, while a company being bought by another company shouldn’t change the premium or death benefit protection, it may change some of the opportunities you may have been given as a policyholder with the company that originally issued the policy.

These concerns don’t usually seem like a big deal to most people when they are young and they feel they have all the time in the world to make adjustments and change, and that may be partly true, but soon after most people take a life insurance policy, they believe they won’t have to think about it for a longtime, or even, ever again. And then there may come an unexpected event in the policyholder’s life, and suddenly they find out that the policy they chose, doesn’t have a provision they might have gotten with another company, or they misunderstood, or were never informed of an option they could now use.

Working with the right agent is crucial to optimizing your life insurance coverage

This is why it is crucial to work with an experienced, knowledgeable agent, someone who can tell you the pros and cons between different companies products, and through understanding your personal circumstance, advise you on what features, and which companies to choose from. The last item to worry about is the quote a premium based on a guess. Areas your agent should be able to explain to you are the differences between companies and products with regard to:

  • Waiver of premium provisions
  • Accelerated Benefit provisions
  • Term to permanent policy conversion options and rules
  • End of term options
  • Reduction of face amount options
  • Lapse and reinstatement provisions
  • Rating improvement provisions

All of these things listed above, and more, are not usually on the mind of consumers in the beginning, but are important to know and understand before you commit to a particular company’s product, especially since this policy could be a part of your life for decades, and you may find yourself in need of a benefit that should have been included in the policy, but you were never given complete information about your product choices.

term life insurance benefits

The Truth About Term Life Insurance

Term life insurance - a great deal?

Term insurance can be a great deal — depending on your point of view — it’s great for the insurance companies because fewer than 2% of term life insurance policies ever pay a death benefit.  The great news is that you’re still alive! The bad news is, you don’t get that money back.

Term insurance allows you to have a larger death benefit for a lower premium than you could buy through a permanent insurance policy. 

But the purchaser of term insurance should know that a term policy is not meant to be in force when the insured statistically will trigger the death benefit. For this reason, term policies are great when your circumstances are that you only need temporary coverage. This includes the income producing years of working people who have others in their life who depend on their income (generally referred to as an income replacement need), a debt obligation that is to be paid-off in a certain amount of time (mortgage protection, home equity or business loan pay-off, unexpected buy-out of a business-partner’s interest, and so on.) 

Not all term life insurance policies offer the same benefits

For these reasons and others, term insurance can be a cost effective way to cover an economic loss, caused by someone’s death, where the risk or need is temporary, but the features and benefits in any particular product should be fully understood and compared to other company’s products before deciding to do an application with any particular company. 

One major area often overlooked by inexperienced agents and their clients is — what other features and benefits [or the particular terms of a feature of benefit] that are in one company’s product, but not “similar” products from other companies. Said another way — not all policies are the same. Different products from different companies offer different things, and an experienced agent will be able to identify the differences and explain it all to you. 

Also, your independent agent should be able to produce and review a VitalSignsⓇ comparison of the carriers he or she is recommending. In the hands of an experienced agent, the reports from the various carriers can help guide your decision to a company you think is most suitable for your goals. 

An experienced independent agent can be a tremendous resource to you with regard to valuable information that may save you time and regret in the future.

the risks of buying life insurance online

The Truth About Online Life Insurance Quotes

There is no such thing as discount life insurance

By law, an insurance company is required to charge the same premium rates, for a given product, to everyone — no matter what agent or company they use to obtain the policy.

This is partly because not doing so creates an unfair marketplace for the consumer, potentially reducing service and information, which could then potentially affect particular groups, classes, or people in certain geographic areas.

It also can lead to a condition called adverse selection — where a certain risk isn’t properly accounted for, or fully paid for. Adverse selection — which is created by a variety of factors including discounts or rebates — can jeopardize an insurance company’s general account and also cause some people in the insurance risk pool to effectively be subsidizing others in the risk pool, and could ultimately lead to a company’s failure.


Buying Life Insurance Online

“Buying” life insurance online creates a perception of savings, and in many cases, deprives the buyer of the support from a professional who can effectively guide them, free of charge.

Sadly, online marketing of life insurance seems to give many people the impression that life insurance is a commodity that can be quoted, discounted, and obtained completely online and that there is no difference between companies or their products. Websites quoting premiums rarely reflect the reality for most folks by definition.

By reading the fine print on the various websites, you will find that the advertised quote is at the best possible rating — meaning, it’s someone with a near perfect medical history, optimal weight, no adverse family medical history, and with no chronic conditions.

This turns out to be a small portion of applicants… and no telephone representative, or even an agent, can determine the applicant’s actual rating; that can only be done by underwriters at the insurance company, which is issued after an extensive review of the applicant’s personal health history as noted by their medical exam report and lab test, as well as a copy of their medical record from their primary physician.

The process of obtaining a life insurance policy can take several weeks, and sometimes months with more complex medical histories, and many times this discourages the applicant from looking elsewhere when they feel they’ve been intentionally misquoted a rate (just so someone could capture their business and shut out other competitors, who may have been more realistic in their quoting.)

Seeking An Experienced Professional

It’s important to speak with an experienced, knowledgeable, licensed agent who understands all the factors in play. The agent can advise you on the various features or benefits that are built into one company’s policy that may not be in another’s. Your independent agent should be able to produce and review a VitalSignsⓇ comparison of the carriers he or she is recommending to you.

In the hands of an experienced agent, the reports on the various carriers can help guide your decision to a company you think is most suitable for your goals. This is where an experienced agent is your best ally, as someone who can provide valuable information and saving you time.

With a knowledgeable, experienced agent, you can get a realistic quote, given your personal and medical history. Your agent will also assist you in presenting all the relevant information so that the underwriters can give you the best possible rating.

And, many people are completely unaware that while working with the right agent will help your underwriting go more smoothly and get you the best possible rating and therefore lower premium, it is all done for the applicant with at no cost to them.

An experienced independent agent is a tremendous resource who can provide you with detailed, valuable information which will save you both time and money. Remember, an independent agent is licensed at a state-level and is uniquely expert in insurance laws. They are your best resource to getting the best policy to meet your needs.