Time For a Change To This Blog

Not that many people noticed, but I took a week off from the blog last week as I tried to regroup a bit. I wanted to use the time to consider a few options. Partly from general burn out and partly because coming up with a new insurance related topic three times a week is harder than I thought, I mulled some stuff over and have decided to make a few changes. 

Part of the problem is that I continue to write another blog on sales and marketing twice a week. I appreciate that it makes me do research on new products and keeps my brain "flexing it's muscles", but it was becoming a bit much. 

After some consideration I will be changing the format here a bit. There will probably be only one (two at most) blogs each week, with less text and more video. This helps me because I'm a decent writer but I can knock out a short video on a topic in a minute or two, which is about the same time it would take you to read one of my blogs. 

I'm looking forward to sharing more information on life insurance, disability, long term care, accident and cancer insurance, as well as our other plans. 

To start us off on a lighter note, here is a good submission for you. If you have any ideas or suggestions, please leave us a comment. Thanks and please subscribe.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

What Is Life Insurance Laddering?

One of the most confusing issues about buying life insurance is knowing how much you will need at different points of your life. As your personal situation changes over time, so will your life insurance needs. Marriage, having children, buying a home or starting a business can mean incremental differences in your coverage. 

And as you get older, your life insurance needs typically decrease. The kids have gone off to college or are on their own, the mortgage is paid and other debt has hopefully been eliminated. With all of this change going on, it makes sense to know what your foreseeable needs will be and adjust accordingly.

Sure, you could just buy one very large term policy to cover the next 20 to 30 years, but what happens after that? Burial insurance sounds good, but what if you should have some health issues that could prevent you from buying an affordable policy? The non-medical policies are okay, but they can be expensive.

This is when you should consider a strategy known as "laddering". Laddering is the practice of purchasing several term policies for different lengths of time and different face amounts. Since the policies are set to expire at different times, you only pay for the amount of coverage you need throughout your different life stages.

As an example, let's say that "Bob" is 35 years old, in good health and a non-smoker. After a quick review, Bob discovers he needs $1 million over the next 30 years. If he were to purchase a policy for $1 million, if may cost him about $75 each month, or $900 each year. Over the course of 30 years, Bob would pay $27,000. 

However, if Bob decided to purchase three smaller policies that had different terms, it would look something like this:

• First policy - A 10-year term with a death benefit of $500,000 ($14 each month)
• Second policy - A 20-year term with a death benefit of $300,000 ($16 each month)
• Third policy - A 30-year term with a death benefit of $200,000 ($21 each month)

The total amount of coverage is $1 million, but the amount of premium Bob pays on a monthly basis is different throughout the years. And this saves Bob money. 

For the first 10 years, Bob pays $51 each month. At the end of the 10th year, the $500,000 will expire, which means Bob only pays $37 each month from year 11 through 20. At the end of the 20th year, the $300,000 policy will expire, which means Bob will only pay $21 each month from the 21st year until the end of the coverage period.

Bob's total premium over the 30 years is $13,080, which means he'll save $13,920! Not bad. And that difference could have been invested into a retirement plan or something else.

As you can see, Bob saved a ton of money plus he got the coverage he needed. During the first 10 years, Bob had $1 million dollars of coverage to pay off his mortgage and other financial obligates. In the second 10 years, with his mortgage principle decreasing, he still had $500,000 of coverage, which would have been sufficient at that point. Finally, in the last 10 years, his spouse could pay off the remaining bit of mortgage as well as take care of his funeral expenses and any other debts with the remaining $200,000.

Even though buying multiple policies may seem like more work, if they are all purchased at the same time through the same carrier, the bill can be consolidated and the savings will be well worth the time and effort. 

If you have questions about laddering your policies or anything else related to life insurance please drop us a note or book a short phone appointment with us. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Do Younger People Need Life Insurance? 2023

If you are a millennial or GenX'er you may wonder what kind of life insurance you should purchase. There are a few different types of coverage available. Term, universal, indexed universal and whole life. Term policies could be considered "temporary" as they only cover you during a specific amount of time, like 10, 20 or 30 years. There are even some companies out there offering 40 and 45-year terms for younger people. Term policies are much less expensive because they only offer a death benefit and there are no other features like loans or cash value. (Some term policies now offer "living benefits" which can help you if chronic or critical illnesses arise.)

Although term life insurance does not accrue cash value, it's affordable for working families during their working years. For instance, a healthy non-smoker in their mid-20's could expect to pay less than $25 each month for $500,000. (Rates are subject to underwriting and are not guaranteed)

On the other hand there are permanent policies, like universal life (UL), indexed universal life (IUL) and whole life (WL).  These policies are more expensive but they also cover for the rest of your life as long as you continue to pay the premiums.

Permanent policies also have various ways to build cash value internally. For example, the UL uses interest rates, but since rates are at historic lows (for now), it's not a great option. We have many younger clients who use IUL's in lieu of investing and are very happy. 

For those who are single with no dependents but own a home, a policy will allow you to keep that home in the family. Having parents or nieces or nephews who could use that home if you should pass can be beneficial and life insurance can pay off the balance of the mortgage. 

So how can you get a policy? You can usually get a policy through work if they offer one, however we always recommend you have additional coverage outside of work, in case you leave your job. Also, that coverage through work is rarely enough to cover all of your debt and replace lost income. If you have a family, you will definitely need much more.

A great way is to use a quoting tool (we have one on our website) which lets you enter your information and will give you several choices of coverages. If you like what you see, you can even begin the application.

A simple method to find out how much life insurance you need is to add up your expenses and liabilities, like the mortgage, car payments and other debts. That should be a minimum for your needs. You may also want to consider lost income if you are the sole breadwinner of the home, and future education costs if you have children. On our website, our life insurance quoting tool offers a calculator to help determine your needs.

You may or may not be required to have an exam. It really depends on several factors, like the carrier and the amount you are applying for. Many companies have decreased their usage of exams during the pandemic, but they still reserve the right to have your medical records transmitted to them. And if there is no exam, you could have to answer a lot of medical questions during the application process. The secret here is to be as truthful and honest as possible, especially when it comes to questions about smoking (tobacco or cannabis) and your family's medical history.

If you have questions about what type of insurance you need or how to apply, let us know. In the meantime, please stay healthy!

Want to know how much disability insurance you need? Drop us a note and we'll send you our free PDF!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! 

Wrapping Up Disability Insurance Awareness Month

Memorial Day is upon us, which is the day we recognize all of the men and women who served in our military and made the ultimate sacrifice. It is an important day and too many of us don't take the time to appreciate these people. If you have an opportunity to attend a ceremony, you will be happy you did.

As it's also the end of May, we can close the books on another Disability Insurance Awareness Month (DIAM), which is when the insurance industry promotes the importance of disability insurance. Unfortunately, disability coverage is not top of mine for most people. Part of this is due to misconceptions of why to buy it and what it does.

For example, most group disability plans cover a few weeks "maternity" coverage, immediately after a child is born. I have worked in some of these groups, like schools and municipalities, when the employee decides to drop her coverage because "I already had my kids." I try to plea with people to keep their policy, not because I'm will lose a commission (I'm on a salary), but because there are so many other times when that policy will be useful.

One of my old sales managers would tell us that when people hear the word "disability", they think of someone in a wheelchair who has been seriously injured in a car accident. The truth of the matter, however, is that over 85% of disability claims are for illnesses, with cancer being the leader in that category. (Heart disease and other cardiovascular illnesses are not far behind.)

Of course there are those people who do get injured. I spoke with a teacher in western North Carolina who had been in a car accident. Someone "t-boned" her car and broke her femur. She was out of work for four months while she went through physical therapy. Of course, her policy did what it was designed to do, which made her a strong advocate for disability insurance among her coworkers.

But what is your disability policy designed to do? Your policy is actually "paycheck" or "income" protection. If you were to get sick or hurt and were unable to work, your policy would help you pay the bills. And we all know that those bills don't stop coming just because you are a very nice person. 

There are those people who don't necessarily need a disability insurance policy. They may have passive income, like rental properties or other investments, that will provide some money to pay monthly bills. For most people, though, this is not the case.

If you have an employer who offers a disability policy, take a good hard look at it. And if you are a business owner, a contract employee or otherwise self-employed, you may want to consider an individual disability policy. They have a few differences from the traditional group plan but can be an integral part of your financial plan.

Have a great Memorial Day and remember those who gave all for our freedoms.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Making Insurance Accessible To All

As we all know, the internet has changed the way people do business. More importantly, it's also changed the way businesses do business. 

Not that long ago if you needed someone for a specific service, you "let your fingers doing the walking in the Yellow Pages". Now I make that reference to my college age daughter and she doesn't know what I'm talking about. Everything from entertainment to financial services has gone digital, and for those who aren't offering some sort of web-based platform, they may as well be throwing a chunk of their marketing dollars into the garbage. 

This struggle is real in the insurance industry as well. The old school method of getting a referral, meeting with them in their home or office over several appointments, and hoping to get an application completed (along with more referrals) has lost some of it's appeal. For younger, more internet savvy consumers, doing their own research and making online purchases is the norm. 

At the same time, these younger people are less interested in selling insurance, mostly because of the old school methods that still are being taught in training offices throughout the country. According to a 2017 article by the World Economic Forum, the average age of a life insurance agent was 59. Considering that agents tend to sell to those around their own age, millennials are, for argument's sake, not being properly attended to when it comes to their own life insurance needs.

In 2007 I went to work for a large life insurance company. We were the "best of the best" according to the management, so you would think that we could attract agents who would succeed and thrive. Our managers boasted that we were ahead of our competitors in agent persistency, because we had a rate after three years of 17%, opposed to 10-15% by our peers. This meant that if they hired 100 agents today, a whopping 17, on average, would be around after three years. And they were actually proud of this.

For the consumers, though, this is bad news as well. How many times have you purchased life, disability or other kind of insurance, only to find out that your agent is no longer with the company?  

As a society, we have become numb and/or jaded when it comes to having bad service. This is why a growing number of people are cutting their ties to agents and buying financial services from the internet. The television is full of ads letting us know to get car insurance, life insurance and investments straight from our computers. Convenient and quick. 

But what about the personal service? What if we have questions or concerns or need to file a claim? Are we destined to having to call an 800 number each time we need something. Even worse, what if we have to speak to someone who is out of the country? Is that good customer service?

At Surf Financial Brokers, we have tried to combine the best of both worlds. Our quoting tools for life insurance, dental, vision and hearing plan, cancer insurance, hospital indemnity insurance and accident plans make it easy and quick for people to find a policy within their budget. And if they like what they see they can start an application.

At the same time, if they want a more personal touch they can book a short phone appointment with one of our agents who can help with our products, including others like Long Term Care and disability insurance. We want to help anyone who recognizes they need insurance to be able to get it in the way they want. 

Let us help you find the right product for your needs.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!