My Discussion With Pat Ardern

One of the things I appreciate about LinkedIn is the opportunity to meet and network with people who are in the same industry as myself. I recently was afforded one of these opportunities when I had a chance to talk with Pat Ardern. 

Pat Ardern is the Branch Office Supervisor of the Transamerica Financial Advisors branch in Stillwater, Oklahoma and she supervises securities licensed reps throughout the state. She enjoys travelling and spending time with her two children and grandson, and she is active in the community and her church.  

Below is my conversation with Pat.

First off, I'm curious as to how you got into the financial services industry.

 

I was laid off in 2007 after the company I had worked with for 9 years was purchased by another company. As I watched the furniture being carried out of our office, I felt like someone had died. The next morning I woke up with the question, “What do I do now?” This was a transformative event for me which brought me to the decision that “This will never happen to me again.” I knew I needed to find a way to have my own business.

At the time, a friend of mine was studying for her securities license with a large, well-respected firm. I asked her if I could look at what she was doing. The financial services industry had always intrigued me, and coming from an accounting background and being a numbers person, it seemed like a fit. I really liked the concept of "recurring income"! The biggest “fit” was that I would be independent and calling my own shots. I came on board with the firm and have never looked back. This industry is not easy, but is a chance to see what you’re made of. I can’t imagine working for someone else ever again.  

 

Tell me how you find your prospects.

I work primarily from referrals. Networking is the way I started out, and I built referrals from there. Everyday encounters yield great new relationships as well. As my book of business grows, referrals from current clients are priceless. Our firm is cutting edge with technology using videos, livestreams and webinars to extend our reach. 

How do you prepare for a client meeting? 

The first client meeting is a "financial needs analysis". There are basic financial concepts that everyone needs to be using in their plan. I have a series of questions that assist me in learning about their current situation, as well as current and future goals. We determine their "FIN" (financial independence number). The FIN number is like a GPS. If you don't know the destination how will you know the route?

I like that. We all need to know where we are going. What kind of networking works for you? Online and/or networking groups? 

Both in person and online networking are beneficial. Whichever you use, the goal is to meet people and build relationships. We all meet new people all the time, and most are open to striking up a conversation. People like to talk about themselves, so it pays to be a good listener.

You are correct! Not talking and listening is one of the hardest parts of this job for me.  

Do you recommend any good books on sales? 

I like Grant Cardone's sales material. "Think and Grow Rich" by Napoleon Hill is a must read. A couple of other books I'd recommend are "Evangelpreneur" by Josh Tolley and "Think Like a Monk" by Jay Shetty. I think in anything success is from the inside out.

It's important to share that kind of learned knowledge. Do you have a mentor? How have you become a mentor for others?

 

I have a few mentors in our firm. Our team building platform exposes me to many extremely successful mentors who have been in our business for 30+ years. In turn, I duplicate the tried and proven system with my team.

Has Covid affected your practice? 

 

Our business has actually increased during Covid. One reason is that we were positioned perfectly with digital resources so we didn't miss a beat. Secondly, I think people were more open to take the time to talk finances while they were working from home and not as socially active. Some tended to become more thoughtful about what's important and their planning for the future. We have no regional restrictions so we can do business anywhere via Zoom.

What did you do with your first commission check?

  

I remember my first check as being less than $100. I spent it, but that first check was priceless. It showed me that what I was doing was legit and gave me the confidence to keep working to make multiples of that check.

Have you ever had a strange or unusual encounter with a client?

I inherited an old annuity contract for which the writing agent was no longer active. The contract owner was a very well known, famous if you will, person. At first I assumed it to be someone who had the same name as the well known person, but it turned out to be the "celeb". I had a nice lunch with the individual and we have talked several times since. It's a small world. 

I'm sure this person appreciates your discretion. 

I know you like to promote financial literacy. At what age do you think kids should start learning about finances?

The best way to teach kids about finances is to be a good role model. That starts very early as our kids watch what we do from day one. I think a parent can teach their child to have the three buckets, Save, Give and Spend from the very first time the child acquires money as a gift or for doing chores.

How can financial literacy be taught to adults who have never really been exposed to the subject?

The unfortunate fact is that most people were never taught basic financial concepts. It's not taught in schools. Financial education is a very big part of what I do for clients. Everyone needs to know the basics so they can move ahead. Another tool I use is our book, "How Money Works, Stop Being a Sucker". A very easy read. it's written so young teens can understand it. We believe this little book is changing lives for generations.

Thanks for sharing all of that great information with us Pat! I'm sure our readers appreciate your insight.

If you would like to reach Pat, her contact information is on her website at http://tfaconnects.com/patardern. 

Her financial literacy page is http://wealthwave.com/patardern. 

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!

Should I Buy Term and Invest the Difference? 2023

There is a school of thought that when it comes to life insurance, people should "buy term and invest the difference". What does this mean and why should it matter when you are trying to secure your family's finances?

First off, the people who like to preach this method of buying life insurance have some sort of issue with purchase permanent life insurance. Whether it is whole life or universal life, they think that the cost too high. These people also think that the growth inside the policy, building cash value, is not as good as putting your money in the market. 

One of my pet peeves in the financial services industry is the large number of financial gurus who give generic blanket advice. These gurus, who are prevalent on TV, radio and other media, including books, seem to feel that everyone is in the same boat. As someone who has been working in the insurance industry for over 20 years, I can attest that financial situations are like fingerprints - no two are alike.

Another issue that many of the agents out there who like the "buy term and invest the difference" mantra are captive agents who work for companies that do not offer good permanent products. Even worse, these agents have been given bad information as to how some permanent life insurance products work by their managers. I have worked for a few of these companies and have heard it myself. 

As I have said in the past, all insurance products have a need somewhere, but not all insurance products are for everyone. This applies to term life as well. Term life insurance is great if you can quantify your specific need. An easy example of this is a loan that needs to be secured. If you have a 30 year mortgage on your home, a 30 year term policy fits the bill, because if you were to die your family could pay off the note. The lender will be happy to know this too.

For many families, there are more things going on than just a mortgage though. There may be other debt, like credit cards and car payments. A young family may want to consider education costs of their kids as well. After doing the math, a 20 year term policy may do the job while the debt is there and the kids are still living at home.

Let's assume that our young family did the math (with their trusted life insurance agent, of course) and realized they needed $300,000 worth of life insurance. A term life policy may cost them around $50 each month (these are estimates). But a permanent policy would cost around $150 each month. According to the gurus, they should purchase the term policy and put $100 into an investment each month. What kind of investment? Mutual funds, hopefully tax deferred, like an IRA. 

Here's the main problem with this strategy. They almost always will buy the term life policy (if the agent has effectively communicated the need) but they rarely do the investing part. "Check back with me in a few months," is the refrain when it comes to putting that extra $100 somewhere. It may be a budget issue or the client just isn't sure about the markets. Either way the plan is not complete.

People have varying degrees of risk tolerance, which is fine. As mentioned, no two situations are the same. Not everyone wants to be in the market and the ones that do can do so through online trading platforms nowadays. 

So what is a suitable alternative that will help a client efficiently and in their budget? Drop us a note or book a short phone appointment to discuss. 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!

Disability Insurance Awareness Month Part 1

May is once again Disability Insurance Awareness Month, when the insurance industry tries to let the public know the importance of having a disability insurance policy. As I say whenever I sit with a client or talk to a group, the Holy Trinity of insurance is your life insurance, your health insurance and your disability insurance (DI). That's how important it is!

Think about it. If you are sick or hurt and are not able to work, your bills just keep coming. No one is going to let you have a free pass on your car payment, mortgage or phone bill because you are a nice person. In essence, having a DI plan in place is paycheck insurance. That's why people call DI "paycheck protection".

How does it work? Depending on your employment and how you get paid there can be variations. The more common scenario is that you buy a group plan through work or your employer pays for it or both. I have seen instances the employer pays for Long Term Disability (LTD) but the employee pays for their own Short Term Disability (STD) policy.

These types of policies usually pay up to 60-70% of your gross income. Keep in mind that if your employer is paying for your policy and you should start receiving benefits, those benefits will be taxable. This is also true if you purchase your plan through a "worksite*" insurance company and they pre-tax your premiums. 

Short term DI usually pays for the first 3, 6 or 12 months of a disability, while long term DI will start paying after those dates. The key is to make sure you have coverage seamlessly throughout the time you are out of work, which is determined by your physician. 

Also, group plans will typically cover maternity for 6 weeks (8 weeks if a caesarean is called for). Too many people will drop their DI plan when they decide that they aren't having any more children. I always encourage people to keep their policy, as it is not "baby coverage" as many seem to feel.

On the other hand, if you are self-employed or a 1099 employee, like a realtor or insurance agent, you may need to look into an individual DI plan. These are structured a bit differently in that rates will be determined based on factors like:

• Your occupation. A welder or a roofer will pay more than a secretary because their job is more dangerous. 
• Your health, age and tobacco usage. Just like life insurance, the insurance company wants to know if you are a good risk or not. 
• Your income. Determining your benefit amount is dependent on how much money you earn, so the insurance carrier may ask for a copy of your tax returns. We have one company that ask for it when you file a claim. 

Another important factor is the "elimination period", which is like a deductible, but in time instead of money. If you have a 14 day elimination period, that means that the policy won't start paying out benefits until the 15th day of your illness or accident. Elimination periods can vary from 7 days to 6 months, and like the deductible on your car insurance, the higher you go, the less the policy will cost you.

Also, keep in mind that individual plans will not cover maternity.

In Part 2 of this topic we'll discuss how to determine how much coverage you need. In the meantime, please stay healthy!

*Companies that offer voluntary benefits like DI, dental, vision and other ancillary insurance products. 

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 the Big Deal With Replacing My Policy?

A few weeks ago I was with a client who needed some extra life insurance. Actually, she needed quite a bit more, and we found a very suitable policy that fit right into her budget. She was happy with it and decided to proceed with the application. I began asking all the questions and everything was going well until we came to the question about replacements. Why was the insurance company so interested in her current coverage and whether or not she was going to replace it with the new policy? 

You see, when you apply for a life insurance policy, the company wants to know if you already have coverage, and if so, which company is it with and are you going to keep it and just get additional coverage, or will you be replacing it all with the new policy? The insurance company isn't being nosy, but actually they are looking out for your best interest. 

The reason for this is that life insurance typically pays a large commission to the agent, around 70-80% for the first year, depending on the policy. After that first year, the agent's commission drops dramatically to around 5%. With this in mind, an unethical agent may try to replace your current policy to sell you something that will pay another large first-year commission.

This practice is known as "churning" as in "churning up fresh commissions" and is frowned upon by the industry, and in some states is illegal. 

The issue is that the replacement may not be in the best interest of the client. Replacing the policy with another may result in higher premiums, but that unscrupulous agent doesn't care. But the insurance carrier does, which is why they have added additional forms to the application packet asking all of those questions about your current policies. In essence, the insurance company wants to make sure that the agent is doing the right thing by you.

It's not just life insurance where this occurs either. Several years ago I was introduced to a very nice lady who had an issue with an annuity. She started out with about $250,000 that she had put into an annuity. The agent would call her every couple of years and tell her that he had something better, and would move her money to another annuity. Each time he did this he made a nice fat commission. 

But something else was happening as well. The move would cost her thousands in surrender charges and early withdrawal penalties. She showed me a folder with all of the paperwork and the agent must have moved her money at least three times. 

We called the current company where her money was housed and I asked what amount of money was there. She was down to about $85,000 and if I were to move it she was going to lose an additional $10,000. I recommended that she stay put and to stop answering calls from that other agent. 

When I let her know what that the agent's commission was (My estimate was around 7% each time he moved her money) she said, "Every time he talked me into changing companies I probably bought him a new car." She was right.

As you can see, those crazy questions are on the application because the company is looking out for you best interest. If you have any other insurance questions you would like answered, leave us a note in the comments section. And 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!

Can Employees Get Tax Breaks?

Since it is tax season I thought I would share a few ways that you can use and maximize your insurance to help lessen or avoid a big tax bill over the next few posts. Some of these ideas may be implemented immediately, while others will help you down the road. Like a wise man once said, "If you fail to plan, then plan to fail."

First and foremost, I have to give the obligatory disclaimer that I am not a tax expert and one should consult their own tax advisor before implementing any of these strategies. Remember that tax laws are constantly fluid and can change as political parties rotate in and out of Congress.

Also, I want to let you know in advance that not all of these plans will work for everyone, but hopefully there will be a nugget or two in here for everyone. With that said, let's get started.

For those of us who work for an employer and are fortunate enough to have medical benefits, find out if those benefits are being "pre-taxed". Section 125 of the IRS tax code allows your allows employers to deduct your benefits from your pay before figuring out what your taxable income is. By simply moving your deductions "above the line" it can save you (and your employer) some money, with estimates around 20-25% on the costs of those benefits. The savings, in other words, come in the form of paying less taxes. And since your employer has to match your FICA* (Social Security) portion of the deduction, that can be decreased for them as well. 

If you have an enrollment company or a worksite insurance company providing ancillary products like dental, vision, disability and other insurance products, odds are they can set up and handle the administration of a pre-tax plan. Many of these companies will do it at no charge for your employer if there is a minimum number of participants. 

Be aware of a couple of items though. First, life insurance can not be pre-taxed. Since life insurance proceeds are generally tax-free to begin with, the IRS is not going to allow pre-taxing. Also, certain benefits can be pre-taxed but really should not be. 

I have seen businesses where their disability insurance, for instance, was pre-taxed. When this is the case, there will be a huge problem if an employee needs to file a claim, as it will be taxed as income. As most disability policies pay around 60-65% of a person's gross income, having that partial pay be taxed can be a financial nightmare for a family struggling to pay their bills.

Other deductions that are not necessarily insurance products can be used for pre-tax savings as well. A 401(k) plan can help you out down the road for retirement and should be implemented if offered. These plans were created in the late 1970's as a way for employers to create a tax-advantaged savings account for their employees. Unfortunately many employers replaced pensions with these plans, mostly because it saved the businesses a lot of money. 

If your employer offers a 401(k) plan take advantage of it and the tax savings that come with it. But be aware that it is not a true "retirement plan" and is basically a "savings plan". By allowing the employee to allocate their money as they wish, it also exposes them to a lot of market risk. 

After the debacle at Enron years ago, laws were enacted to heavily regulate the 401(k) plans. And after the financial recession of 2008 many employers changed their plans or did away with them altogether. Do some research or ask your tax advisor what is best for you.

The next few posts will continue on the theme of insurance and taxes so stay tuned. In the meantime, please stay healthy!

*There is a downside to saving all of this money on taxes by using the Section 125 plan. By reducing your taxable income while working, it also reduces your FICA contribution. This, in turn, can reduce your the amount of your Social Security check when you are eligible to receive these benefits. If you are paying less in, plan to get less out.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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!

Can Cannabis Users Get Life Insurance?

I recently had a conversation with one of our marketing partners on the subject of how various life insurance companies deal with insuring cannabis users. It was a good talk and I learned a few things (which is always a good thing).

A little background first. Back in the 1990's, only around 24% of the population was in favor of legalizing (actually "decriminalization" is the correct term) marijuana, but views have changed a bit and that number is currently around 66%.  With more and more states making cannabis legal in some form or fashion over the last 20 years, the insurance industry has had to adapt and alter their own guidelines. 

So how does all of this affect the rates of cannabis users? Can they get a life insurance policy and what happens to the rates?

You actually may be surprised to know that there are plenty of carriers out there who are insuring cannabis users, and they are not just limited to those no-exam companies.

Actually, one can still be approved a traditional life insurance policy if they use marijuana. Like policies for tobacco users, which have slightly higher premiums, many companies treat cannabis the same. 

But there are a few factors to figure into the equation when they determine rates. Some of these are gender, general health condition and if the applicant is using marijuana recreationally or as a medical prescription. 

When you consider that tobacco has more known negative health affects than marijuana, the rates can be comparable to "smoker" rates, or even less in some cases. Ultimately, the most successful way to get the best life insurance rates is to shop around and compare multiple insurance companies. That way one can find out what policies are out there and best suit their needs.

At Surf Financial Brokers we offer a very easy-to-use quoting tool that asks about cannabis use, with a good selection of carriers, their rates and other information. And if someone sees a policy they like, they can even start an application.

Keep in mind that when it comes to calculating insurance rates for cannabis users there is not a homogenous answer. Each company sets it's own rates and underwriting guidelines. Therefore, how companies view marijuana use will vary from carrier to carrier.

One thing to keep in mind is that marijuana is used to treat a wide variety of medical conditions, from pain to anxiety. The insurance company's underwriters may be more concerned with those medical conditions that require treatment with marijuana than the actual prescription. 

This means that one's premiums could be higher as a result of health risks like cancer or auto-immune diseases which are being treated with cannabis, instead of the cannabis use itself.

But there are those people who use marijuana not for medicinal purposes but just recreational use. For those folks, many insurers will still issue a policy. How the policy is issued (as a tobacco smoker or non-smoker) is determined by usage, frequency and other factors. As mentioned earlier, each company has their own guidelines.

Underwriters may as more questions concerning how one uses marijuana (edibles, smoking, tincture, etc.) and quantities. They may also be concerned about any other drug usage, including alcohol. Much like long term care insurance underwriting, they might try to "connect the dots" to see if the applicant has general "lifestyle" concerns. 

Most of the underwriter's questions will be about frequency. The less often one partakes of cannabis, the lower their life insurance rates can be potentially. Someone who smokes once a month will have a lower rate (in some cases it doesn't affect the rate at all) than the person who enjoys a joint daily.

If you are an occasional user and still need life insurance, let us know. Or take a look at our quoting tool and run a quote for yourself. In the meantime, please stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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!

4 Things People Should Know About Insurance

One of the reasons for starting this blog was to help educate the public in the many facets of insurance. The business can be confusing for most people (including some agents). There are many kinds of insurance from the property and casualty side which included auto, homeowners and business policies, to the life and health side of the business. Even though I have licenses that allow me to sell both kinds, I prefer to concentrate on the life and health part. Here again, there are a lot of different products in that category alone. 

Here are just a few life and health insurance products:

• Major Medical
• Term Life insurance
• Whole Life insurance
• Universal Life insurance (traditional and indexed)
• Long Term Care 
  
• Annuities (Fixed, indexed and variable)
• Disability Insurance
• Critical illness
  
• Cancer plans
• Accident plans
• Hospital Indemnity
• Dental
• Vision

And that is not a complete list. Each of the ones listed above can be broken into a few more subtopics. The average consumer is not expected to know all of the nuances of each product. But for those of us in the industry, we need to be aware how each product works and when it is appropriate to suggest it for each client.

However, there are times when a client knows nothing about insurance. For instance, someone may tell me that they absolutely have to have a whole life insurance policy. When I ask why they feel they need a whole life policy they may say something like "My father said he always had it so I need it." Obviously that is not a valid reason as a term life policy may be more appropriate and could save the person a lot of money.

With this in mind, I wanted to make a short list of things everyone should know about insurance, especially life and health products.

1. Life insurance can change as your life changes. A young couple with small children may need term life early on, but as the kids move out of the house and the mortgage gets paid off, their life insurance needs change.  

2. Disability insurance is just as important as life insurance. If you die, your life insurance will pay a lump sum of money to your loved ones, who will be sad but will continue to move forward with their lives. However, if should unexpected get seriously ill or have a accident, your family will need to replace your income as well as taking care of you. Disability insurance is really paycheck insurance and it allows your family to continue paying the bills while you recover. 

3. Being chronically ill is a very expensive proposition and Long Term Care insurance (LTCI) can help cover those costs. We all know someone who is in a nursing home, assisted living or other type of senior care facility. Depending on the location the annual costs of these facilities can easily be from $30-50k each year. With the pandemic ravaging facilities, most people would prefer to stay in their own homes, but that can be even more expensive. Round the clock care can run twice the price of a facility.

4. Don't pay attention to "financial gurus" who give generic advice on TV or the radio. The truth is that everyone has a different financial situation and each needs to be treated uniquely. For example, I cringe when I hear someone say "Buy term and invest the difference. That may be a good strategy for some people but others may be better off with permanent life insurance.

Another one of these geniuses says buying LTCI is a bad idea before the age of 50. He fails to mention that about a third of those receiving long term care services are under 60. Again, everyone has a different situation.

I hope this helps you with some basic information you need when it comes to your family's financial security. As I always say, insurance is the one product we buy hoping to never have to use it. If you are interested in seeing what some coverages cost, feel free to run a few quotes on our website. In the meantime, please stay healthy.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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 People Have Enough Life Insurance?

Many Americans do not have nearly enough life insurance to support their families’ needs. In fact, about 44% of families say they would face financial hardship in six months if the primary wage earner were to die, noted David Levenson, president and CEO of LL Global, in a recent video presentation. Now, a group of life insurance organizations is aiming to change that.

LL Global, the parent organization of life insurance researcher LIMRA and LOMA, is helping lead an effort with industry trade associations and more than 60 of their largest member companies and distribution partners to close the life insurance coverage gap. One initiative is encouraging financial professionals to engage with their existing clients to look at the adequacy of their protection. 

"Most people think it’s just to pay for funeral expenses; but the word ‘life insurance’ is really a misnomer," Elsie Theodore, a Virginia-based regional vice president of Primerica, told Investopedia. "Can anyone really insure someone’s life? No, ‘life insurance’ is really income replacement. Its purpose is to replace the income of the breadwinners in the household."

As a general rule, she added, “When you are trying to determine how much coverage you should have, you must first look at your annual income then multiply by 10. You make $100,000 a year, your life insurance should be at least $1 million.”

That number may seem high but the priority is making sure that loved ones can stay in their home, take care of the everyday bills and even provide for education costs if children are still in the picture.

A major problem today, Theodore noted, is that many people rely solely on the group life insurance provided by their employer, which is often inadequate. Typically those policies only provide coverage for one or two years salary replacement. Also, they may or may not be portable, which means if the the employee changes jobs the policy might not be there when their family needs it most. 

According LIMRA’s research, about 60 million American households don’t have the proper protection for their families, with an average deficiency of $200,000.2

What's more, the problem is worse than it was in the past. While 63% of Americans had life insurance coverage a decade ago, that number had dropped to 54% by 2020, LIMRA says.

There are a lot of contributing factors to the incomplete coverage, including changes in individual life
distribution, employment-based benefits, worker participation rates, family and household make-up, and population demographics. People also have competing financial priorities.

In addition, there are misconceptions about price point, need, and ease of purchasing, particularly among Millennials. This is ironic when you realize that most of them grew up with phones and most agencies are trying their best to make insurance coverage accessible on mobile devices.

As LIMRA points out, the COVID-19 pandemic has highlighted the fragility of life and focused more Americans on the role of life insurance.

Theodore recounted one particularly sad situation: "After a few attempts to get this one client to sit with me and get her plan started, she called me because she had 13 members of her family die from COVID-19 and not a single one had insurance. That was an unfortunate wake-up call.”

The life insurance industry has also responded to the pandemic by adapting its sales practices. Companies have made significant advancements in the ability to deliver a fully digital purchase experience so consumers can choose to buy a policy when, how, and where they want. Understandably, insurance carriers are increasing the availability of web based applications and decreasing the requirements for in person medical exams. 

If you aren't sure if you have enough coverage, let us help. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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 The Current State Of Long Term Care? Part 1

Over the past year nursing homes, assisted living facilities and other facilities that house the chronically ill, mostly the elderly*, have been ravaged by Covid. The numbers of infections and deaths are heartbreaking, especially since the vast majority of these people are isolated from their families. But why are all of these people in these facilities to begin with? Are there other options available and what do those options cost?

In general terms, most of the people who are in these types of facilities are deemed "chronically ill", which means that they will be ill for a long period of time and there is no cure. Some will receive some rehabilitation but getting them back to 100% is not possible. An example of this could be an older person who has broken a hip which will prevent them from walking again. 

Medically speaking, long term care (LTC) services are for those who are unable to perform or need help with Activities of Daily Living (ADL's). These are:

• Bathing
• Transferring (going from the bed to a chair, for example)
• Dressing
• Using the toilet
• Eating
• Incontinence

Paying for these services can be expensive. Many people find out too late that Medicare will not cover the costs of assisted living facilities and will only pay for skilled nursing care for up to 100 days, and that is only if you are released from a hospital. In other words, the smart move is to begin looking for LTC insurance early on when you are healthy and insurable.

Most LTC policy's benefits will be triggered if someone is unable to perform two of the six ADL's. Another way to trigger the benefits is to be cognitively impaired, i.e. Alzheimer's or dementia.

There are other types of facilities as well, which mostly are non-medical. Think of an apartment but has meals and someone checks in on you. LTC policies generally don't cover these types of facilities.

Let's assume that you are reading this and are healthy enough to go through the underwriting process with an insurance carrier. What are your options? My suggestion is to call a few facilities in your area** to find out what they are charging their patients. Most are pretty good at giving you rates, but be aware that some will give you a monthly rate and others a daily rate, which is an industry norm. 

With that valuable information at your disposal you can begin to look at ways of covering those costs. Needless to say, these services can be very expensive and it can easily take a few years to wipe out any assets one may have spent a lifetime working for.

Let me say right off the bat that there are a limited number of available "Medicaid beds" in each facility, but to be eligible for those one has to prove a level of indigence. In other words, you are limited in the assets you own and there is a "look back period", which at the time of this writing was 60 months. This is to avoid someone from transferring all of their assets to a family member so they can get free nursing care. 

Going back to our options, if you are young enough you may want to look into a life insurance policy with LTC or "living benefits" as part of the policy or even a rider. This locks in the rate for your coverage and if you should pass away before you use it the life insurance will pay a death benefit to your loved ones. 

The nice part about this option is that it pays you a percentage of the face amount of the policy once your doctor says that you can't perform 2 of the 6 ADL's or if you are cognitively impaired. Once the benefits are triggered they pay until they run out.

In the next post I will go over a couple more options. In the meantime, check us out on the web and please stay healthy!

*One of the myths of nursing facilities is that only the elderly are patients, when in fact nearly a third of the patients are under the age of 65.

**Costs vary dramatically depending on your geography.  

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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 Your Insurance Agent's Work Situation?

Have you ever wondered why some insurance agents like to suggest some insurance products or companies more than others? There are a lot of reasons why this happens.  Some reasons may be legitimate concerns while others may have to do with the agent and his relationship with the carriers. Let's take an objective look at why this happens. 

To begin with, there are generally two types of agents. "Captive" agents work for insurance companies with an exclusive agreement to only sell their products and products of other carriers that have some sort of pre-arranged contractual obligation.

An example of this is when briefly worked with a company who had a limited menu of policies. We had term and universal life, a horrible cancer plan and an accident policy. There were agreements in place with other companies to sell their health plans and long term care plans, but generally speaking those policies were not very good. 

In exchange for working with this company as a captive agent we were given weekly training, a cubicle with a land line telephone, and other office accoutrements, like a receptionist and access to a fax machine. Sometimes there are even some benefits included, like health coverage.

As a captive agent, one is generally required to hit sales numbers that are mandated by the carrier and the agent is actively overseen by a manager*. This is part of the answer to our original question.

On the other hand, an "independent" agent can offer a wide variety of products (not including the ones from the captive companies), but for the most part have to take care of covering the costs of overhead, like rents and phone bills. No benefits here though, as the agent must pay for these costs. There are no sales quotas or managers, just agents trying to find the best fit for the client. 

Years ago I worked with a company that had a blend of the two scenarios, where we had to hit the company's numbers to retain our contract and benefits, but were still free to offer products from other carriers. One agent sold the bare minimum of our employer's products but preferred other products because they were less expensive for the clients and paid her higher commissions.

The issue for consumers is that they don't know if their agent is always working in their best interest or not. As someone who has worked in both types of agencies I can say that for the most part agents are trying to do the best they can for a client. However, there are those who, because of the limited variety of products they have available to them, will try to sell something that may not be a great fit.

I have worked with both formats over the years. In my opinion, working with a captive company is especially good for newer agents who would like training on subjects from product knowledge to prospecting for clients. After a year or so of this, the agent may decide to move over to an independent status. My personal preference is to work independently. I still take advantage of training opportunities when they come along, but the less structured work environment means that I can be available for a client when they need me. 

An old veteran agent once told me that captive agents work for a company, while independent agents have companies who work for them. And if the companies don't do their job right, the agent can fire them. It's true to an extent, as I can stop placing business with an insurance carrier anytime. 

 *The sales manager is always looking over your shoulder, even when he's not there. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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! 

Is Your Agent Too Pushy?

Insurance agents have reputations as pushy salespeople similar to those who sell used cars. When I originally went into the business I was fully aware of this and was resistant to even get into the industry. To be honest, the first company I worked with was guilty of feeding into this stereotype. The reason for this was that instead of trying to be a consultant and helping the client structure a plan with a group of good policies we had to work with, we only had one product. And for the most part, we would only meet with the customer once.

We were trained to be aggressive and to get out of someone's home or business with a check in hand. As my coworker would say, "Your income is in their wallet and you need to do everything possible to get it out of there." We dubbed this "guerilla selling", since we would rush in, try to make a few bucks and get out. 

Unfortunately this left me with the impression that all insurance sales were like this. I was young and naïve. My 23 year old brain knew that I did not want to do this kind of sales for the rest of my career. So I got out of insurance and went into selling office supplies, then retail management. 

After a few years I decided to rejoin the insurance workforce, but this time things would be different. No high pressure selling for me. For the most part, things were much better than the first time around and I noticed that many of my coworkers were of the same mind as me. 

Sure, there were those agents here and there that insisted on being pushier than the rest of us. Those agents rarely stuck around for long because much of their sales did not stay on the books. One of the nice things about selling insurance is the residual commissions, but if someone cancels their policy too soon, those commissions go away. 

We had veteran agents who offered to mentor the newer reps. If we had a case we were working on, we could run it by them and get feedback. The most often asked question from them would be "Is this in the best interest of the client?" In other words, "Are you helping the client or yourself?" 

This gave me a much better perspective of what an insurance agent was supposed to be doing. That stereotype of a pushy insurance agent was fading from my mind. 

But why does that stereotype still persist? One answer may be the product itself. Let's face it, no one really wants to buy insurance. It is a product that we buy hoping to never use. Also, it's not tangible. You can hold your policy, but in essence, it's just a promise on a piece of paper. Unlike a car or a home or a video game, you can't enjoy it (unless you enjoy the peace of mind that comes with having it). 

I like to use the "saving up for" test when it comes to sales. Ask someone what the next big (or small) purchase is that they are saving up for. You will get answers like a down payment on a home or a new flat screen TV. No one saving up for Long Term Care insurance or a disability plan. 

And the fact that some insurance has to be mandated should tell you something. If a state government says you are required to have auto insurance, you can infer that if they didn't there would be a lot more uninsured motorists driving around. The same goes for mortgage companies requiring homeowners insurance.

Speaking for myself, I don't want to "high pressure" someone with something they obviously don't want but most like need. With that in mind I use what I call "good pressure" selling, which means that, like a family member who is looking out for their best interest, I'm going to do my best to help someone make the best decision, not just for my client, but for their family as well. 

If you think your agent is too pushy you don't have to do business with him or her. But be aware that most are looking out for you and your family. By asking questions and building a rapport we hope to earn your trust and dispel the idea of the pushy salesperson. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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! 

4 Things To Consider Before You Buy Cancer Insurance

If you currently do not have a cancer insurance policy, you may be wondering why anyone would need or want one. In my experience as an agent over the last 20+ years, I found that the people who purchase a cancer insurance plan do so because they either have concerns about cancer in their family history or they know of someone, a friend or co-worker, who has been diagnosed with cancer. In the case of the latter, there is a realization that their health insurance does not cover all of the costs associated with a cancer diagnosis. 

Many times I have sat down with an employee of a business where I am enrolling benefits and hear how one of the other employees has recently been diagnosed with an invasive cancer. This creates a type of "wake up call" for the other members of the staff because they just assumed that their major medical coverage would cover all of the bills. 

With all of this in mind, I thought it would be a good time to cover a few things to consider before you purchase a cancer plan. 

1. Cancer plans cover a lot of out-of-pocket expenses. Items like co-pays, deductibles, travel and lodging (if you need to go to a hospital that is not in your area) and experimental treatments not covered by your insurance are just a few of the items that can cost you thousands of dollars. 

2. Not all cancer plans work the same way. Some plans are considered to be "treatment plans", which means that they will reimburse you as you are receiving treatments. Keeping in mind that cancer treatments can go on for months, and in some cases years, these plans can be "richer" as they will continue to pay out as you continue to submit claims. 

On the other hand, some carriers will offer "lump sum" plans, which will pay you a one-time lump sum of money upon diagnosis of cancer. These plans vary in price as you choose the amount of money you will need at the time of the application, some going as high as $75,000. 

I have found that some people who choose the lump sum plan do so for the convenience of only having to file a claim once and it is easier to understand. They also may want just enough to cover their deductibles. There are no wrong answers as it is a matter of preference.

3. You may not be able to get a cancer plan if you have been recently diagnosed with cancer. Unfortunately, we meet people who have just gotten a "clean bill of health" and want a policy. For those people we have to break the news that they may have to wait several years before being covered by a policy. 

4. If you have a policy already you may want to keep it. Most of the insurance companies that sell cancer insurance rarely increase the rates of their policies. Instead, they keep the old policies on the books and will develop or enhance "new policies". For example, one carrier has a policy with a "benefit builder", which means it pays more the longer you keep the policy. However, that policy is no longer being sold, but the company will let you keep it if you want it. 

As treatments evolve, so do the policies. A good example is one of the "lump sum" policies we offer that includes genomic testing. A tissue sample of the cancer is sent to a lab, which in turn will send treatment suggestions to the doctors, all at no extra charge. 

If you would like information about cancer coverage for you or your family, drop by our website or leave us a note. In the meantime, stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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! 

Life Insurance and Long Term Care Combo Products

If you or a loved one ever need help with daily living activities, you will discover that custodial care can be expensive. That’s true whether the care is provided at home, in an assisted living facility, or in a nursing home, and it’s especially true if care is needed for many years.

Long-term care (LTC) insurance is available, but insurance companies have learned that these costs can be steep. Premium increases for LTC insurance are in the news (for example, some press reports tell of cases where premiums have tripled in the last three years), and some insurance companies have dropped out of this business. Consumers face the prospect of paying thousands of dollars a year, every year, and never getting any benefit at all if it turns out that custodial care is not needed.

Some people might prefer another path to LTC coverage, such as a hybrid or “combo” product. In a traditional life insurance policy a consumer buys a product that will deliver a death benefit, but with a combo product, the consumer can obtain a rider that will offer a payout if the covered individual needs LTC.

Let's assume that our new friend Bob has an insurance policy on his life, payable to his son James. Bob’s policy has an LTC rider. So, if Bob needs LTC, that insurance policy will provide a benefit to help pay those bills. Regardless if Bob needs care and collects an LTC benefit, his life insurance policy will pay a death benefit to James at the time of Bob’s death.

Generally, in this situation, Bob would receive an “accelerated death benefit” to pay for care.  When someone receives such a payout, the amount of the lifetime benefit is subtracted from the death benefit that eventually will be paid to beneficiaries. Typically, a combo life insurance product would be some form of whole life or universal life, rather than term life insurance, although of late we offer a term policy that includes "living benefits".

The common aspect of this tactic is the absence of a “use it or lose it” drawback. With standalone LTC insurance, the money spent could wind up generating no return. With life insurance there will be a payout to someone at some point. The extra LTC coverage is another benefit that possibly will come in handy.

Acquiring LTC coverage in this manner usually avoids the threat of future premium increases. As another attraction, existing life insurance policies might be exchanged, tax-free, for a new contract that includes an LTC rider.

The attractions of LTC combo products, however, come with negatives as well. The underlying problem here includes the potentially disastrous costs of LTC, and this problem can’t be escaped by switching from one type of insurance to another. There often is a cost to adding an LTC rider to an insurance policy. These combo products may require a substantial outlay, which must be paid upfront or within relatively few years.

In addition, tax advantages may be lost with combo products. With most standalone LTC insurance policies, certain amounts of your premium count as a medical expense, which can potentially be deducted. That’s not the case with a rider to a life insurance policy.

As of 2017, people age 40 and younger can include LTC premiums up to $410 as a medical expense; that amount scales up as premium payers age, maxing out at $5,110 for those 70 and older. Those outlays are added to other medical expenses, and the amount that exceeds 10% of adjusted gross income can be taken as an itemized deduction.

Combo products vary widely, and so do individuals’ concerns on this issue. However, generally, people who only want LTC insurance might be best-served with standalone coverage, working with an insurance professional to hold down premiums. That said, if you are interested in life insurance such as whole life or universal life, it may be worth exploring the idea of adding LTC coverage, perhaps for an added fee.

There are a few factors we take into account when discussing these options, notably the age of the insured at the time of the application and, of course, their budget. A younger person may find a combo policy more affordable than an older person.

If you have questions or concerns let us know. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. 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!