Showing posts with label universal life. Show all posts
Showing posts with label universal life. Show all posts

Wednesday, May 12, 2021

What Is The Mix And Match Life Insurance Strategy? 2023

Can you imagine having one wrench in your toolbox that is supposed to take care of all sizes of nuts and bolts, but you know deep down that that wrench can't do all that the jobs it is advertised to do. It works fine on some things, but not all things. Your life insurance is like that as well.

When someone tells me that they only buy term life insurance or they only buy whole life I always asks why. The most common answer is something like, "That's what my mother always had." I want to respond that my mother drove an AMC Gremlin, but you don't see me with one. 

The other answer I get is that they heard a financial "guru" on television who is an "expert" in all things pertaining to personal finance. This guru suggested they "buy term and invest the difference". I won't go into that argument but I did cover it in the previous post.

This is why it is important to know about the different types of insurance and the needs they fill. Having only one type of insurance at a time, or for your entire lifetime, can be inefficient and expensive.

First and foremost, life insurance is at it's cheapest when you are young and healthy. Leveraging your age and good health can work to your advantage, especially when it comes to permanent life insurance coverage. In a perfect world, one could afford to buy all the life insurance they need when they are in their 20's. But our lives are not always ideal.

Some people will buy term coverage during their working years with the intent of buying permanent insurance, like whole life or universal life, when they "have the money" or retire. Others will try to buy an expensive plan when they are young, only to stop paying for it when they need the money for something else. 

If you know what features each kind of life insurance work best, you can develop a better strategy for securing your family's financial future while keeping it in your budget. A great way to do this is to "mix and match" a couple of types of insurance. 

For instance, let's say that you have met with your agent have agreed that you need $500,000 of life insurance coverage. That would be an expensive policy if it was all in one whole life program. However, you also know that you may need some permanent coverage down the road when you are older.

At this point you could, assuming you are fairly young and in good health, purchase a $450,000 term policy, either 20 or 30 years, for a affordable rate. Then you could cover the difference of $50,000 with a permanent policy, like an Indexed Universal Life plan. That would make sense to most people and fit in their budget.

An important part of all of this is having an independent agent who can offer a wide variety of plans. Some agents only want to sell term life while others really push whole life to their clients. It's like going to a car lot that only offers sedans, but you need a truck. Why bother? 

Make sure that your agent has all the insurance products you need. If you feel as if he or she is pressuring you into one plan instead of giving you several options, look for someone else to help you. 

If you have any questions about this, let us know. 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!

Wednesday, April 14, 2021

What Is The Convertibility Feature In Term Life Insurance?

People who buy term life insurance usually do it because it is extremely affordable and it fits well within their budget during their working years. At some point down the road, however, a permanent policy that can build cash value may seem more attractive. Perhaps the insured can afford to pay a bit more or they just don't need as much coverage. In other words, situations change.

Most term life insurance policies include a stipulation that one can "convert" the policy to a permanent policy, either a universal life or a whole life, within a specific time frame. Instead of purchasing a new policy, one can convert all or some of their current policy, which is much easier. That is because with a conversion there are no health questions or exams. Yes, the new policy will be based on the age of the insured at the time of the conversion, but that would be the same if one were to purchase a new policy.

Without having to worry about health questions, one can convert their policy regardless of changes in health. For example, say you purchased a 20-year term policy 10 years ago, but since then your health has declined significantly. A heart attack, cancer or diabetes would probably keep you from getting a new policy or have one issued at a higher premium . However, you could convert some or all (depending on the insurance carrier) of the face amount without being concerned if your current health situation will affect the rates.

In other words, if you were healthy when you bought the term policy, the new permanent policy will be priced as if you were still healthy, even if you are not.

Why do people want to convert a term life policy? The first reason is to lock in on a premium that will not increase. At the end of the policy's term period, the rate will jump up dramatically and will do so each year. This becomes an "annual renewable term" (ART) which in essence is a series of 1-year term policies. No one really wants that. 

On the other hand, permanent policy will stay the same price as long as you continue to pay the premiums. No more having to worry about outliving your life insurance.

Another reason people will convert a term policy is to start building some cash value. That money grows inside the policy tax-free and can be used down the road for all kinds of purposes*. The earlier one converts the policy the faster the cash value grows. 

The important point is too find out when you purchase a policy as to what your options are. Some carriers will only let you convert in the first 10 years while others will allow for a conversion anytime before the term ends. 

Also, find out what kind of policies you can convert your term policy to. You may not want a traditional universal life policy and that may be your only option, while other companies only have whole life. These are good questions to ask your agent, or drop us a note and we'll help you out. 

Know what your options are when purchasing life insurance! 

*Depending on the amount of cash that has accumulated in a policy, the funds can be either surrendered (cashed out) or borrowed. Surrendering the cash value could have tax implications, but getting the money in the form of a loan is a great way to use the funds for a retirement supplement. Any outstanding loan amounts will be deducted from the face value of the policy at the time of death.

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!

Wednesday, April 7, 2021

Can I Take Out A Life Insurance Policy On Someone Else?

Every once in a while I will be having a conversation with someone who wants to know if it is possible to insure someone else, like an acquaintance. When this happens I don't really know if they are kidding or not, but I ask if there is some sort of relationship there between the two of them. Usually the answer is "no, you can't" which seems simple enough but people ask why.

Can you imagine the madness that would ensue if people just went around insuring the lives of people they didn't know but "looked sick"? And if insurance companies had to pay those claims they would be out of business quickly. 

There are some guidelines (and reasons for them) when it comes to insuring other people. One of the basic rules for this is that there must be an insurance interest. In other words, before you take out a policy on someone else, you must have a relationship, either familial, personal or financial, with that person. Of course we can take out a policy on a spouse or child, as people do that all the time.

And if you borrow money from a financial institution or an individual, they may require a policy to secure the loan. That is considered acceptable as well. 

Another piece of this is that most states forbid insuring someone over the age of 16 without their knowledge.  But if the insured is over 16 they must sign a form acknowledging they are being covered. This rule applies even if the insured is your 18 year old child.

Back in the old days big companies would buy life insurance policies on all of the employees, with the company being the beneficiary. The thought process was that if the employee died there would be "transition costs" associated with finding a replacement. These Corporate Owned Life Insurance (COLI) policies became controversial when family's in need began learning that the death of their loved one was profitable to their deceased loved one's employer.

The issues arose (as well as lawsuits) when the insureds were no longer in the employ of the company. At that point, any insurable interest went out the window. In the early 2000's several of these types of legal issues got some news publicity which shined a light on how many large corporate companies were secretly adding to their bottom lines.

Nowadays, COLI's are still used, but not covering every employee, including the janitor. (They were actually called "janitor policies" because of this). More often than not, COLI's are used to cover the lives of the top brass, like the board of directors or top executives, who are supposedly fully aware of the policy. I have even heard that the beneficiaries of the policies are split among the company and family members. That sounds much fairer.

With all of that said, here is a short list of people you can insure:

  • Family. When the life insurance agent asks what your relationship is to the insured, immediate family is a no-brainer. Be aware that there are limits on insuring children but otherwise you should be okay.
  • Former family. As in ex-spouses. If there are children involved the court may order that you maintain a life insurance on your former spouse to help with expenses if the former spouse should die.
  • Parents. Yes, they are family but they may have let their life insurance policy lapse or expire and a final expense plan may be the best answer.
  • Business partner. Buy/sell agreements are usually written up between business partners to help ease with the transition of responsibilities when one of the partners dies. These agreements are usually funded by a life insurance policy so one partner can buy out the deceased partners ownership. 
  • Key employees. Key employees are the ones who contribute significantly to the business or may have some highly specialized skill. These people are difficult to replace and if they die unexpectedly the company could take a financial hit.

If you have any questions about any of these scenarios, ask your agent or drop us a note in the comments. In the meantime, 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!

Monday, March 29, 2021

Why Should I Update My Beneficiaries?

As I mentioned a few weeks back, updating your beneficiaries on your policies is an important part of owning life insurance. How often you should do these updates is up to you, but in a perfect world we would have a reminder.

When we change our clocks those two nights of the year, we're also reminded to check the batteries in our smoke detectors. What a great way to take care of the important task that could save the lives of your loved ones. And doing the "maintenance" on your life insurance policy is just as important to your family.

I recommend you pick a day, say Independence Day for instance, to review your life policies. By taking a few minutes you may realize that your the person you originally chose to get your death benefit is no longer in the picture. As our lives change from marriage, divorce and death, so do the people and situations that can impact your family upon your death.

My father passed away last year and we eventually found a few life policies. Unfortunately, none of the beneficiaries were up to date, leaving us in a position where the insurance company had to  pay the benefits into my dad's estate, instead of paying directly to his heirs.

One of the advantages of life insurance over leaving directives in a will is that the policy is a contract in the eyes of the law, thus taking precedent over a will. However, if the beneficiaries have predeceased the insured, you may have to wait for those proceeds.




While checking your life insurance policies, you may as well check all of your other policies as well. Many non-life policies also have beneficiaries that you may have forgotten about. Have a cancer plan through work? It's probably got a beneficiary. These types of policies, called worksite, voluntary or ancillary products, pay you a benefit directly, but if you die in the middle of medical treatments, the policy will pay any leftover proceeds to whomever you name.

I had a client in North Carolina who was in an accident and was eligible for benefits as he was in the hospital. Unfortunately he died a few days later and his family didn't realize there was an accidental death benefit until I mentioned it to them. The policy also paid his beneficiary for the other benefits while he was receiving treatment.

Just like you do maintenance on your car or home, take the time to do a quick check up on your policies, or ask us to take a look at them for you with no obligation. 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!

Friday, March 26, 2021

Is Selling Insurance Hard? Pt 2

In the previous post I went over a few facets of what makes selling insurance, life insurance in particular, a difficult job. There is a hesitancy from people to purchase something they know they need, but generally speaking, do not want to purchase. In essence, asking someone to add to their monthly bills to protect their family from financial ruin is a hard job.

One of the many objections agents get when selling life insurance goes something like this. "I want to talk to the wife (or my husband, partner, significant other) before making a decision. I may need a few weeks." Where do I begin?

First, I have rarely met a spouse who did not want to be named a beneficiary on a life insurance policy. And by "rarely", I mean never. As a smart agent once proclaimed, "Wives hate life insurance but widows love it." 


A few years ago I met a woman who was in dire financial straits. Her husband had left his well paying job to start his own business. In doing so, he borrowed some money to get his business off the ground. The wife was fully aware of the situation and insisted he purchase a life insurance policy to cover the debts he had incurred if he were to die unexpectedly. He told he would "get around to it." 

After a few months went by, he told his wife that he had bought a policy. She never saw the paperwork or a policy but assumed that he was telling the truth. Not long after, the husband was clearing out some trees near their home when a log fell on him, crushing him to death. 

You can figure the rest out. There was no policy. She couldn't afford to repay the debt and lost her home. She was forced to take a small apartment and, even though she had been out of the job market for a long time, had to take a job as a teacher's aide in a high school. When I spoke with her she broke down in tears several times from the stress that could have been avoided if her husband had just purchased that policy.

When someone says they'll get around to it later, I share that story with them. And I make sure that their spouse or significant other is present to hear it as well. 

The other objection I deal with is "I need a few weeks to think it over". The logic is that if I have a few weeks to think rationally I will decide if I need a policy. This is one of the most ridiculous things I have ever heard. Did they need a few weeks to decide on the purchase of a TV, cell phone or clothing? Or how much time did it take to decide to drop $7 on coffee, which they do often? 

Imagine someone dropping $50 each month on coffee but not wanting to spend $35 to protect their family. As stated previously, the priorities are all out of whack.

So when the prospect claims they need a few weeks, I let them know that the insurance company will also need a few weeks to decide if they will approve them and what the rate will be. I will encourage them to start an application which can be submitted with no money. "That way the underwriting process can begin and a paramed exam can be completed in the meantime. And by the way, we pay for the exam as well, so you won't have to pay anything until the insurance company has done their due diligence. And that process could take a few weeks," I say. "So while you're thinking it over, so is the company."

People think of insurance agents as being high pressure sometimes. Personally, I feel that the vast majority of agents are trying to do the best thing for their clients and sometimes that requires "good pressure". And in the end, the beneficiaries of that policy are thankful for the agent's work. 

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!

Monday, March 1, 2021

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!

Monday, February 15, 2021

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! 

Monday, February 1, 2021

When Your Life Insurance Won't Pay

Life insurance, as well as disability insurance and any other type of insurance is a promise. It's a promise made on behalf of the insurance company to pay you for a loss, whether you lost your life, your ability to work or anything else stated in the policy. But more than just a promise, which can be broken, your life insurance policy is a contract. Legal and binding, it has plenty of legal jargon involved, which you, as a policy holder, should be fully aware of.

When you look at a brochure for an insurance policy there is usually a section in the back that describes "limitation and exclusions", or something to that effect. This list can be long or short, but either way you should take a few minutes to understand what is covered and what won't be covered if you suffer a loss.

A good agent will be happy to discuss this with you beforehand. At first glance, most of the items are common sense, but some can be confusing. And some will be altered or "re-interpreted" if need be. 

For example, almost every life or accident insurance policy I have seen has an exclusion for loss as a result of terrorism. This was widely seen and described by agents in the following scenario: You go to the Middle East and a bomb goes off. If you die, the company isn't paying. 

However, shortly after 9/11, with thousands dying as a result of a terrorist act, life insurance waived this exclusion. Their explanation was that the exclusion was for "foreign" acts of terrorism, in another country, even though that was not stated in the contract at all. Personally, I think they made the exception because they knew it would be a public relations nightmare if they enforced the terrorism exclusion when emotions were already incredibly high. 

If you take a look at the list of exclusions, some make sense. For example:

  • Losses due to acts of war. Life insurance, as well as other types of insurance, rarely cover you if you are hurt or killed in a war. Some will even state that the war can be "undeclared", which is broad. The military does offer some small policies, but be aware of what you're buying.
  • Losses due to self-inflicted injury. This makes sense. If you stab yourself, you should not expect the insurance company be on the hook for you. Accidental deaths will usually be covered.
  • Suicide. Generally speaking, life insurance companies will pay, but after a "contestability period", which can be a few years, as stipulated in the policy. Things can get tricky if the insured dies of a drug overdose during that time and the insurance company would need to have proof that the overdose was intentional.
  • Losses that occur while committing a crime. If you decide to rob a bank and the guard shoots you, don't expect the insurance carrier to pay your loved ones. 
  • Murder. Believe it or not, there is a "slayer rule", which means that if your beneficiary kills you, the policy does not have to pay them. Go figure.
One of the other reasons why a policy won't pay is if you are not truthful on the application. The insurance company's underwriting department will try to find out as much about your medical history and lifestyle as possible during the application process, but they can't look under every stone. If you have misrepresented yourself (nice way of saying you lied) on the application, the insurance carrier may not pay the death benefit.

The best advice is to be honest with your agent and the underwriter (they may conduct a phone interview) when they ask about your medical history, alcohol and drug use, travel plans and risky activities. 

By spending a few minutes looking over your policy you can save you and your family a lot of confusion and heartbreak. If you have questions about any of this, feel free to look us up on the web and drop 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! 

Wednesday, January 13, 2021

3 Frequently Asked Questions Life Insurance

Occasionally someone will ask me a question about insurance. More specifically, they ask about types of insurance and which is the "best" for them. After thinking about it, I have noticed that a lot of the same questions are asked, so I thought I would take the opportunity to help everyone with some broad stroke answers. Keep in mind that these are fairly generic answers and if you need a more specific answer to your situation, let me know. 

1. What is final expense insurance?

Final expense life insurance is exactly what is sounds like. It is designed to pay for expenses associated with dying, specifically funeral costs. A funeral can cost around $10,000, but that is just an average. Be aware that there are other costs associated with death, such as a hospital stay. I recommend to our clients that they insure themselves for maybe $15,000 instead, just to make sure their loved ones are not having to come up with those unexpected expenses out of their own pockets. 

Most final expense plans are comprised of whole life insurance, which can be expensive. Since whole life insurance typically builds cash value which is unnecessary for what the need is, you may be able to find another alternative. If you are healthy and can make it through a medical exam, you may want to consider a guaranteed universal life (GUL) policy. These policies don't build any cash value, but can be a lot less expensive. GUL's are guaranteed to be there for you as long as the premiums are paid.

2. Should I buy life insurance to cover my children? 

Yes! For some reason people think that putting life insurance on a child is a horrible thing. "I just don't want to think about my child dying" is the common refrain. Neither do we, but it does happen. As I mentioned in a recent post, it is sad enough watching parents suffer through the loss of a child, but it's just as bad attending a fund raiser to pay for the funeral.

A permanent policy that builds cash value is appropriate in this case. And it can be very affordable since the child is young and healthy (I assume most kids are "non smokers"). And when your child is older you can transfer the ownership of the policy to your now adult child, who can continue to pay the low premiums, or cash it out if they need to. 

A side note: Most insurance companies frown on large face amounts for children's life insurance. Generally speaking, $25,000 or $50,000 is more than enough and the underwriters will ask a LOT of questions if the policy is for more than that amount.

3. Do I have to keep my beneficiaries the same?

Absolutely not! As a matter of fact I recommend you review your life insurance every few years. Part of that review should be updating your beneficiaries. Changes in circumstances may lead you to decide to change your beneficiaries. Perhaps your current beneficiary has pre-deceased you, or your child isn't as responsible as you had hoped for. 

I had one client who was widowed and her only child was incarcerated. She felt as if she was paying for insurance that would benefit no one. I asked her if there was a charitable cause that she was interested in and she said her church was always in need. We managed to change the beneficiary to the church with enough put aside to cover her final expenses. 

Keep in mind that beneficiary changes can be made at any time, but some companies do require a "wet" signature, which means you may not be able to do it over the phone or online. 

If you have questions about life insurance, drop me a note in the comments section. And if you would like a quote you can click here and run your own. 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!

Friday, December 18, 2020

Why Younger People Should Invest In Life Insurance

Younger adults have always been a difficult market for life insurance agents. They typically feel they are indestructible and will live forever. On top of that is the feeling that life insurance is unnecessary because they tend to marry later in life and don't have the responsibility of family. Nothing could be farther from the truth though.

Our young adults are missing one vital piece of information that could really work in their favor and that is they could be leveraging their good health and young age. Just because they don't think they have a need for life insurance now doesn't mean that they won't need it in a few years. 

Life insurance is cheaper for those who are younger, healthier and don't smoke. Everyone knows that. And for those who are in their 20's, taking advantage of this could really benefit them as they age. Whether they are looking for just a term policy or something that can build cash value down the road, there's a good probability that our younger people can get a great deal.

For instance, purchasing an Indexed Universal Life (IUL) policy and overfunding it from a young age offers a much better opportunity of growth than a traditional whole life policy would. These policies also include features like early withdrawal for income streams, living benefits that you can use while you're still alive, and some tax advantages. 



I often tell the story of a young attorney who really didn't care about the life insurance portion of the policy as much as he wanted a safe place to put his money and retire a bit earlier than most. The illustration I rand for him showed some great tax-free withdrawals (in the form of a loan) as well as the peace of mind knowing that if something were to happen to him his wife would be okay financially. 

That same policy for one of his colleagues who was just a couple of years older but was overweight and a smoker couldn't produce the same results. For him, the "cost of insurance" would have been taken most of the gains of the policy off the table. Again, health matters.

But let's say you don't have the income to spare like the young attorney did but you still want to lock in on a great rate for life insurance. Traditional term policies were always the way to go for coverage during your working years. The problem was that the terms usually maxed out at 30 years, leaving people uninsured (or uninsurable if their health got bad) when they needed the coverage most. 

For these people, we now have a carrier offering a 40- and 45-year term policy, which can lock in a rate to age 65 or even 70 years old. Of course, underwriting is still applicable, but it's still a great deal. These policies are aimed at the "millennial" market who are forward thinking and know that the future will be here faster than expected. 

If you are young, healthy and don't smoke (or know someone who falls into this category), use the "Get a Quote" button on the upper right of this page to see if a term policy would fit in your budget. And if you want an illustration for our IUL product, book a a phone appointment and we'll be happy to talk with you to find out what your goal is. 

In the meantime, stay healthy and let us know if we can help you secure your family's financial future.

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!

Monday, December 14, 2020

Do I Need Term Or Permanent Life Insurance?

Life insurance gives you a way to protect your loved ones avoid financial stress surrounding your funeral and help ease the transition to life without you.

When you’re shopping for life insurance, you have options. You can choose between multiple insurance providers. You can pick the amount you want your policy to pay out when you pass away. You’ll also need to make a decision about how long your policy will last, and that usually means choosing either term or permanent life insurance.

When it comes to term vs. permanent life insurance, what’s the difference? Which policy type is best for your situation? Hopefully this will help you understand the basics to both permanent and term life insurance policies.

What Is Term Life Insurance?

Term life insurance gives you life insurance for a set term. That means you choose a policy and a death benefit (the amount your beneficiaries will get when you pass). But you also choose a term associated with your policy.

At the end of that term (e.g., 10, 20, 30+ years), your policy is set to expire. At that time, you have options. You can let the policy expire, renew it for a new term or — assuming your insurer allows — convert it to a permanent life insurance policy. Many carriers will give you an option to convert your policy to a permanent policy during the term.

Why would you choose life insurance that will expire after a certain time? Simple: term life insurance policies are significantly cheaper than permanent life insurance policies. And, in some cases, you may feel you only need life insurance for a certain time.

For example, some people buy term insurance with a term that lasts the length of their mortgage or until their kids will be done with college. That way, your family can get through major financial milestones with or without you. Once the house is paid off and the kids are educated, you may not be as worried about leaving your partner without your income.

The amount you’ll pay for your term policy depends on a few things: your current age, the term of your policy and the size of your death benefit.



CNN Money has a helpful example to give you a ballpark idea. They say that a healthy 35-year-old male buying a 20-year term policy with a death benefit of $500,000 will pay about $430 a year. At 50, that same male will pay $1,300 annually for the same policy.

Most term life insurance policies (97%,according to the Insurance Information Institute) are level-term policies, meaning you decide a term with your insurer and your death benefit stays the same throughout the term.

But there are other types of term life policies, including yearly renewable policies and return-of-premium policies. 

Of course there are pros and cons to term life insurance. 

Pros: Less expensive, flexibility in choosing a plan that meets your needs and it's easy to understand. 

Cons: Policy expires at the end of the term, which could leave you with nothing. Also, it lacks cash value.

What is Permanent Insurance?

You can probably guess from the name: permanent life insurance is a type of life insurance that stays in effect throughout your entire life. Once you buy your policy (assuming you pay your premiums), your death benefit is guaranteed for your beneficiaries, whether you pass away in 10 years or 80.

But there’s more to the puzzle here. Most permanent life insurance policies come with a cash value component. As you pay your premiums, that money accumulates with your insurance provider. Depending on the type of policy you choose, you might get returns on that cash value in the form of dividends.

There are three different types of permanent life insurance:

  • Whole life insurance: You get permanent life insurance plus a cash value component that essentially functions as a savings account. You earn dividends on your policy’s cash value component.
  • Universal life insurance: With this policy, you get permanent life insurance plus a cash value component that earns interest based on money markets. You may also be able to adjust your policy’s death benefit (assuming you pass a medical exam). There are a couple of versions of Universal Life and in recent years have proven to be very suitable for many people. 
  • Variable life insurance: This gives you the most flexibility — but also the most risk. You get permanent life insurance and you can invest your cash value component how you want (stocks, bonds or money market mutual funds). The issue is that if your investments don’t perform well, the losses can eat into your death benefit.

The cost of your whole life policy depends on a bunch of different things: your age, your current health, the type of permanent life insurance you choose, the amount of your death benefit, the insurer you choose — the list goes on. We’d love to give you a figure for how much you can expect to pay, but there are too many variables here.

Generally, be prepared for permanent life insurance to cost between five and 10 times more than a term life policy. For all that extra money, you get a policy that won’t expire and a potential earnings vehicle while you’re alive.

There are also pros and cons of permanent life insurance.

Pros: Policy will last for life and accrue some cash value. And if you have some medical concerns after the policy is issued, it won't affect your policy. 

Cons: More expensive, can be more complex and difficult to understand, and the cash value may disappear if the policy isn't structure correctly.

Despite what the financial "gurus" in the media profess, there is no "one size fits all" approach to this. Everyone has different issues, like medical conditions, the budgets and other financial considerations which may determine the face amount of the policy. 

A short conversation with us can help determine how much coverage is needed in your budget. Book a phone appointment to have a quick talk to determine your needs and how we can help you secure your family's financial future. 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! 

Wednesday, December 9, 2020

Cash When You Die, Cash When You Live Part 2

In the previous post I explained how Indexed Universal Life (IUL) is a great alternative for those who would like their life insurance policy to be useful while they are still living. The growth in the policies, which builds cash value, is based on an index of the stock market rather than interest rates. That means the growth inside the policy can increase faster in this low interest rate environment.

How is the IUL a way to help you in your retirement years? First, let's acknowledge that this is first and foremost life insurance. There is underwriting involved and for those who are young, healthy and do not smoke, the rates will be much less expensive. With that in mind, the growth of the cash value of the policy will greater as well for those in good physical shape.

One of the concepts of permanent life insurance is "over funding", which means that one can contribute additional premiums to the policy. This has to be done within certain limits, per the IRS (life insurance has a special tax status that can be discussed at another time), but it helps accelerate the cash value. Accessing that cash can be beneficial if one has emergency expenses, as it can be surrendered or taken out of the policy as a loan. 

Taking the money out as a loan has advantages and disadvantages. The money taken from the policy is tax-free, as it isn't income. On the other hand, if you die, your beneficiaries will get the death amount of the policy, minus the loan amount. Also, the interest can be a bit high, usually around 8%.

But there are other ways to use an IUL to your advantage when it comes to retirement. Let's compare it to a Roth IRA, which is one of the better vehicles out there. The Roth IRA has the following features:

  • Post tax dollars are contributed.
  • Tax-deferred growth.
  • There is a limit as to how much can be contributed ($6000 for 2021).
  • You have to be at least 59 1/2 years old to access the money without tax penalties.
On the other hand, here are some the features of an IUL.

  • Post tax dollars are contributed.
  • Tax deferred growth.
  • There is NO limit on contributions.
  • You can access your cash value at any age.
  • There are living benefits for chronic illness and critical illness.
  • If you die, the policy will pay your beneficiaries the face amount, minus any deductions or loans.
As you can see, an IUL can be a great alternative to a Roth IRA. People who are younger, healthier and don't smoke can make the most of this type of life insurance policy, so it obviously doesn't work for everyone. It also helps if the insured has the means to over fund the policy.

Years ago I had a client who used an IUL in an interesting way. Since he had been over funding it early on, it had plenty of cash value within a few years. This gentleman, who loved to look for a good investment, would see a parcel of land and decide to purchase it. He didn't want to go to the bank and fill out a loan application, as that was too long of a process, so he would call the insurance company and borrow against his policy to make the down payment on the property. Usually he would get his check within a few days.

He would repay the loan amount within a few months and do it again if he saw another good investment property. In essence, he was "warehousing" his money in the IUL for future investments. In the meantime, he still had plenty of coverage in case he died.

If you would like more information on IUL's or a quote, stop by our website and fill out a contact form so we can get back to you. 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! 

Monday, December 7, 2020

Cash When You Die, Cash When You Live Part 1

In a former life I had a securities license and sold products like mutual funds and variable annuities. Retirement planning was also part of the work as I would talk to people, mostly business owners or self-employed individuals, who had no funds put away or had gone through the little they had when the economy took a downturn around 2008. 

It was difficult trying to convince someone who was already wary of being in the market that they should return. At the time the market dropped, people who were not my clients called me wanting explanations. "Why are you calling me? I'm not your guy," I would ask. 

"My broker won't return my calls," was the usual answer. These people just wanted to vent and their usual investment reps were either dodging them or dealing with "bigger fish". 

In that experience I learned a couple of things. First off, as I mentioned earlier, a lot of people were just not willing to jump back into investing. Secondly, these people "lived in the moment", as most of them were younger and really didn't seem to care about their retirement years. Finally I realized that they could leverage their youth and relatively good health and purchase the life insurance they also didn't have.

I had worked with a company that focused on whole life insurance for a few years and liked the concept, but to be honest, I felt it was a bit too conservative. The company wanted us to sell it as a "retirement supplement", which was a hard sell. Even the mutual companies had tepid growth at the time.

I had also sold traditional universal life insurance, but there were other issues there. For starters, the growth inside the policies were based on interest rates, which had sunk to new lows. Back in the 1970's and early 1980's, universal life policies were sold as investment vehicles when the interest rates were in the double digits. Now they were losing money as the "cost of insurance" tends to increase in these policies as the years go by. In other words, the cash value inside the policies were getting eaten up by internal costs.

After doing some research I found a better alternative. The Indexed Universal Life (IUL) policy offers more potential for growth than a whole life policy or a low-interest universal life policy. But there is more to the story than just another life insurance option.

First off, let me acknowledge that there are detractors. The IUL is, like it's traditional counterpart, built with increasing internal costs, which can also "eat up" the cash value. However, it's internal growth is dependent on an index of the market (the clients has options to choose from) instead of interest rates. 

A properly structured IUL can offer upside growth with downside protection. There is a cap and a floor. The cap is the most the policy can earn and the floor is the least, typically zero. In other words, if the market takes off and does well, the policy's cash value will increase. On the other hand, if the market drops, as it did earlier this year when the pandemic struck, the policy loses nothing. 

Some carriers have begun offering IUL's with other benefits, either built in or as optional riders. Of course there are the usual riders like the accelerated death benefit and disability waivers of premium. But some include living benefits for chronic illness and critical illness benefits. 

In the next post I'll show you why an IUL is a great choice for supplementing your retirement plan (if you have one). 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!

Friday, December 4, 2020

Getting Our Priorities Straight During the Holidays

With the holidays right around the corner I thought it would be appropriate to share a story from years ago when I was working for a very large insurance carrier. The agents were required to meet once a month and discuss our sales production numbers, and part of the process was that the veteran agents would give advice to the newer sales reps. 

As was usually the case in December, sales were down across the board. People generally don't buy much life or disability insurance before the holidays, with the exception of signing up for their benefits through work, so the agents were not too happy. I was one of them.

I shared how I would sit down with a couple to discuss life insurance, for instance, and would hear interesting excuses for not buying. "The holidays are coming and I need the money to buy a television," or "The new Iphone is coming out this week." 

That made no sense to me. "You have a wife and kids and a mortgage. If you were to die unexpectedly in the next few days, that cell phone isn't going to help your family stay in their home," I exclaimed to no avail.


Herein lies the problem for us insurance agents sometimes. We deal with people who mean well, and want to do right by their families, but their priorities are out of whack. The short term goals have overtaken the long term goals. Living in the moment is their mantra because "who knows what the future holds?" If they really want to know what is in store for them they should ask their elders. 

As I expressed these concerns to my colleagues at our sales meeting, a veteran agent laughed. "I know what you mean. Everyone is living in the moment, especially younger people. They think they are going to live forever and nothing will happen to them," he said. "But you have to help them understand that is wrong."

He continued to talk about the whole situation. "The holidays should be a time to emphasize the family. That should be their focus and if it isn't, then you need to make it their focus." It made sense. 

Of course we all want to have some nice gifts under the tree for the kids to open on Christmas morning. But trying to outdo ourselves (or anyone else for that matter) isn't what the holidays are all about. Wiping out our bank accounts at the end of the year over a phone or a television actually can make our festivities (and the new year) miserable. 

More importantly, all the gifts in the world can't make up for the loss of a loved one. So my message for you this year is this: It's fine to splurge a bit. This year has been tough on everyone, but remember that the holidays are about family, whether they are immediate, extended or otherwise. Make sure your priorities are in the right order. 

My job, as an insurance agent, is to make sure that your family will be able to continue to live comfortably if something should happen to you. Your priority should be making sure that your family is able to stay in their home and continue without you were to die unexpectedly. 

As I talk to my friends and clients I am learning that many have decided to cut back a bit on expenses this year. One less stocking stuffer or electronic gadget won't be missed. My wish for you and yours is to enjoy your family as much as you can. And 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!

Monday, November 30, 2020

4 Things You Should Take Care Of Before You Die

As they say, nothing is certain but death and taxes. And as your tax rate may be able to go up and down, there isn't much you can do about your death. But you can make it a lot easier for those you leave behind if you have your affairs in order ahead of time. Depending on your situation, you can take care of some or all of these items early on and it doesn't have to cost you a fortune. 

The basics of taking care of things before you go to your eternal reward are not too complicated. Ask yourself the following questions.  

  • Do I want a funeral? If so...
  • Do I want to my family to have to pay for my funeral?
  • Do I have any assets that need to be transferred at my death? For example, a home, business, collections, etc. 
  • Do I want anyone to be excluded from those assets?
In other words, do you want to make these decisions now or do you want your family to have to try to figure it all out after you are gone? 

Years ago my mother passed away. She had a small collection of jewelry that included a few rings and broaches. I discussed this with my father and suggested he distribute the jewelry as he wished while he was still alive to hear "thank you" from the recipients. But I had ulterior motives as well. I didn't want to be the one having to figure out which family members would get what.

My father never followed through. At his passing the jewelry just got distributed, and I'm pretty sure that some family members were overlooked while others received small items that were intended for others.

With this in mind, here's a short list of things you should take care of before you die.

  1. Buy life insurance*. Sounds obvious, but making sure your family can pay for your final expenses is very important. When you die, people will have their hands out asking for money, like the funeral director and the lawyer. The only one bringing you money will be the insurance agent. Make sure your beneficiaries are up-to-date and keep in mind that you can "assign" part of the proceeds to the funeral home.
  2. Pre-plan/Pre-pay for your funeral. My father went to the funeral home and picked out his casket in advance as well as other items on his "final wish list". He failed to pay for any of it, leaving my sister and I to front the money until we received the life insurance proceeds.
  3. Have a will. This keeps your estate from ending up in probate, which can be costly and puts your estate at the mercy of a judge. A will can alleviate any disagreements between family members as to who will receive proceeds and how much. For instance, if you own a business and one child actively works there while another child does not, you can put directives in the will that address the issue.
  4. Have a living will. Again, you can alleviate a lot of tension in the family by making decisions ahead of time when you are lucid.
Making sure that you have taken care of these kinds of issues in advance will keep your family on speaking terms (as much as possible) and avoid conflicts. 

Nowadays, people have extended families, businesses, investments and other obligations that are hard to untangle if someone were to die unexpectedly. Letting attorneys and courts make those decisions can be costly and unproductive. Make sure your intentions are known and your loved ones will remember you fondly. 

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

*Life insurance trumps a will since it is a legally binding contract. 

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! Thanks!