What Is Final Expense Insurance and How Can I Avoid Buying It?

You probably have seen the commercials on TV with Alex Trebek pitching a life insurance plan with no medical questions.  These ads typically show elderly people discussing how one of their friends died and the surviving spouse was left with all the bills.

What they are selling is known in the industry as "Final Expense" insurance and if you plan correctly, you won't need it.

Final Expense is a whole life policy, typically sold in units.  Each unit is $1000, so multiply the price Mr. Trebek is telling you times the number of units needed to have a nice funeral.  With the average cost of a funeral between $7000 - $10,000, depending on where you live and how fancy you want to your send off to be, you'll be paying more than the price you see on the screen.

The "no medical exam" part can cost you extra as well.  Anytime an insurer does less underwriting on a policy, they build that additional risk into the premium.

And some final expense policies have a provision that says that if you die in the first 2 years of the policy, your beneficiary doesn't get the death amount, but instead a refund of the premiums paid plus some interest.

The reason people purchase these policies is because they have either put off the inevitable and/or they have had a health scare, which makes them less able to get better rates.  Generally speaking, you probably will not be getting healthier as you age.  Now is the time to look at life insurance, not when you are sick and old.

So what can you do to avoid all of this?  Talk with your insurance agent (hopefully it's us!) and discuss a comprehensive life insurance plan that includes your final expenses.  An affordable alternative is a Guaranteed Universal Life policy purchased while healthy and will cover you to age 120 (yes, we do that now).  The lower rates will be locked in and you'll have one less thing to worry about.

Are You Ready For Open Enrollments?

November 15 is the first day of open enrollment season for health insurance.  This is when you can make changes on any of your health insurance plans. 

Hopefully things will run much smoother than last year, but be prepared for glitches that are bound to happen.  We suggest that you make an appointment to meet with your health insurance from now since the enrollment period is shorter than last year.  

If you are in the Myrtle Beach area and need an agent, contact us to book an appointment.  The good news for South Carolina residents is that Assurant Health will be added to the health exchange.  This gives everyone another option to choose.

As of now, the insurance companies have not released what the new premiums will be, so be ready for some increases in your premiums.

Would You Rather Have An Insurance Salesperson Or An Insurance Consultant?

Everyone is different.  Not everyone wants to be "sold" something.  Especially life insurance.

The advent of the internet has brought many challenges to those of us in the insurance industry.  Whereas one used to be called on by an agent, now many people can go online, do their own research and determine what they want to purchase.  On the other hand, some people still want someone to sit with them and discuss their financial and insurance needs.

We do both!

Want to use a financial calculator and go online to purchase life insurance?  You can do it here. And if you'd like for one of our agents to sit down with you and discuss your needs, we can do that too.

And while you are at our website, you can take a look at other types of insurance as well, like Disability, Cancer, Critical Illness and Dental*.

Let us know if we can help.

*Not all plans are available in every state

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!

Would You Trust This Doctor?

Imagine you live in a town, and it that town there is a physician who treats every ailment the same. "I only prescribe penicillin,"  says the doctor.  Everyone through the door, whether suffering from an infection, a cold, broken bones, mosquito bites or just a headache gets the same medication to cure them. 

In reality, if this doctor existed, he or she would be run out of town on a rail, or at the very least, have their license to practice medicine revoked.

However, there are financial advisors and insurance agents who do the same thing.  Have you ever heard the agent that says "I tell all of my clients to buy term and invest the difference"?  One cure for a variety of financial ailments. 

People have different situations, and like snowflakes, no two are exactly the same. Consider factors like marital status, elderly parents, kids who are at home, kids who are out of the house and those who have returned back home. There are other variables as well, like debt, employment status, benefits through work and many others. I can go on listing all the things that make your financial situation different from others. The gist is that one insurance product may be good, but not great.

At Surf Financial our philosophy is this:  There are a wide variety of insurance and investment products out there and they all serve a purpose somewhere, but not every product is for everybody.  Does a 25 year old need an annuity?  Probably not, but some universal life or a savings plan might be a good start.  Does a 75 year old need a term life policy?  Not unless they need it to secure a loan or have another specific need in mind. 

The truth of the matter is that if an insurance agents says to you "I don't sell that product because I don't believe in it" the odds are good that either they don't understand how that insurance products works and who it works for, or it simply is not available to them. 

In the first case, I remember working with agents who just could not wrap their heads around universal life insurance. Their excuse was that if they couldn't understand it, then how could they explain it to their clients. Going back to our doctor, can you imagine hearing "I don't understand how a virus works so I only treat fractures"? 

And there are those agents who do not have access to certain insurance products. I knew a couple of agents who were "captive", which meant that they had contracted with a company who only allowed them to sell approved products within their portfolio. Newer agents like working for these kinds of carriers because they only need to learn a handful of products. In the long run, it put them and their clients at a disadvantage. 

In other words, without asking questions, a true "advisor" isn't any better than the doctor with one prescription.  Let us help you by having an honest conversation. Yes, we will ask you some questions to find out what your situation is, but it only takes a few minutes. And if you are looking for the best disability insurance quotes, life insurance or a cancer plan, give us a call. You can even book your own appointment to make it even more convenient. 

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!

Changing Face of Long Term Care Insurance

There have been a lot of changes in Long Term Care insurance in recent years.  Here are some things you should be aware of:

1.  Many companies that were in the business of selling LTCI aren't anymore.  When the LTCI first hit the market, companies jumped in with no actuarial claims history.  Many policies offered "lifetime benefits", but with people living longer, claims went up.  As a result, carriers either sold their books of business or stopped selling the policies but continued to service them.

2.  Companies reserve the right to raise the rate on a policy after issue.  In other words, if you were forward thinking enough to purchase a policy when you were younger (and reasonably thought it would be less expensive), you could have seen your premiums increase.  This happened often after the market dropped in 2008 because the companies' reserves (where they keep the money to pay claims) was invested in the stock market.  Some companies have gone through a second round of rate increases again in the last year or so.

3.  Newer policies have been stripped of benefits.  The previously mentioned "lifetime benefit" is gone from nearly all policies, as are many other benefits.  Again, rising costs are the culprit.

4.  Companies have started offering LTCI benefits inside permanent life insurance policies or as riders to life policies.  This makes the most sense if you are younger, because you don't have to worry about rate increases (see #2) and the policy can actually do 3 things:  be life insurance for your family if you die, offer LTCI benefits if you become chronically ill, or act as a retirement supplement if you want.

Long Term Care insurance should be part of a holistic retirement plan.  Contact us for more information at Surf Financial Brokers.

Insure Your Love

Valentine's Day is a few weeks away and with all of the love in the air, we think it's a great time to protect those you love with life insurance policy.

The LIFE Foundation has a page dedicated to this concept and we wholeheartedly endorse it.  And a little extra life insurance can be affordable.  In fact, if you want to know how much such a plan could cost, click here.  Keep in mind that we have policies up to $250,000 that require NO PARAMED exam!  How easy is that?

It's easy to "insure your love".

CD's vs.Annuities In A Low-Interest Environment

In the last few years, the Federal Reserve has kept interest rates low in an effort to keep inflation at bay.  For some people, like those refinancing a home or other debt, this is great.  However, it makes it difficult for people who are trying to make a few dollars in a conservative fashion.

For instance, CD's have traditionally been a safe haven.  The bad news is that the interest rates on these are very low, between 1-2%.  When you consider that inflation runs around 3%, the money is actually losing value.  

An alternative to this dilemma of late has been an annuity.  Specifically, a fixed indexed annuity, which offers growth with downside protection.  These annuities typically have "caps", which is the maximum rate of return the annuity offers.  In recent years, these caps have dropped significantly.  

Complicating matters, agents are promoting annuities with 7 and 10 year contracts, with hefty surrender charges for early withdrawals. And at the end of the contract, some of the annuities require annuitization (taking an income stream).

A reasonable alternative is a shorter term annuity with no annuitization requirement. With interest rates slowly creeping up, it makes sense to purchase a 3 or 5 year annuity that can be annuitized OR taken as a lump sum.  And it will still earn more than that CD at the bank!

Before you attend a "retirement seminar" for that free lunch, contact us and let us show you several options to help you make an informed choice.