Friday, January 31, 2020

Special Needs Trust

It seems like the topic of special needs planning drops into my lap every 3-4 months.  Occasionally when discussing life insurance needs with a family, I'll learn that there is a special needs child in the picture. Each time the topic comes up, I learn a little more about how folks are using a mixture of community organizations, local government agencies and private funds.  Like a snowflake, all situations are different, but in many cases they can be handled nearly the same.

Let's look at an example.  A middle-aged couple has 3 kids, one of which is autistic.  While it is assumed that one of the other two kids will take responsibility for their sibling down the road, nothing is written in stone. And a myriad of things can go wrong. The siblings may not want, or be able to care for their special needs brother or sister.  Mom and Dad can care for the child up to a point but someone is going to have to care for them as they get older.  And what happens when Mom and Dad pass away?

Most importantly, special needs kids grow to become special needs adults.

A Special Needs Trust is typically the answer.  First and foremost, I highly recommend you find an attorney who has a couple of these irrevocable trusts already approved by a judge.  As an attorney friend of mine said when discussing this topic with me, "Do not let an lawyer 'practice' on your client!" Especially since the trust is "irrevocable", meaning it will nearly impossible to make changes later. 

A Special Needs Trust works like this:  The trust is established but without any money inside. The money comes from a second-to-die life insurance* policy on the parents.  The logic behind this is that if one parent dies, the surviving parent can still care for the child.  At the death of the second parent, the life insurance policy is paid to the trust which then can help support the special needs child/adult.
The key to all of this is planning.  As I stated earlier, all cases are different, however taking the time to prepare can really lessen the stress and financial burden down the road.

A second-to-die policy is usually less expensive than a traditional life insurance policy because the insurance company does not have to pay out the benefits until two people die, instead of one. Yes, both will have to go through the underwriting process, so if one of the parents is in poor health it can easily throw off the affordability factor. In my experience, most of these parents are younger and it is a non-issue.

I have learned that there is a community of special needs parents. These great people network and willingly share the resources and information they have acquired with each other. However, whenever I talk to them not all are aware of the special needs trust or may have heard bits and pieces of information. In my community of North Myrtle Beach, SC, I have tried to find local attorneys who have had special needs trusts approved by the courts (again, no practicing!) and keep them available for referral. In turn, the attorney recognizes my role in the process as well. 

If you have questions or additional information to share, please do so in the comments section, or drop us a note on our website. And feel free to book a free consultation with us to speak over the phone. As always, please stay healthy.

*We suggest a second-to-die guaranteed universal life policy.  For more information, contact us through our website at Surf Financial Brokers.  


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.

Wednesday, January 29, 2020

The Money Machine 2023

Recently I had a conversation with one of my favorite clients. She's had her life insurance with me for a few years. I've tried to convince her that she needs some disability insurance, as she is single and lives alone. No kids and no one else to help her pay the bills. As a self-employed person, her income is above average. She was hesitant, mostly due to the premium payment.

"Let me ask you a question," I said. "But first, I want you to think about your annual income. Get that number in your head."

"Okay, I have the number," she said. "What next?"

"Now imagine that you have a small machine in your house that prints money." A smile crossed her face as she thought about it. "Every year that machine prints the same amount of money as your income." She was curious. "My question for you is would you insure that machine?"




She sat up and said, "Well, yeah. It's printing my income. That's a lot of money!" That's when it hit her.

"You're the machine," I said. "And if you, as a machine, break or go offline and can't work, you won't be able to pay your bills."

She completed that application that day. And she gave me a few referrals as well. Thanks, money machine! Let us help you insure your paycheck. 



Chris Castanes is the president of Surf Financial Brokers, as well as a professional speaker helping sales people be more productive and efficient. 

Friday, January 24, 2020

Do You Have the Old Kind of Life Insurance or the New Kind? Part 2


In the last post, I discussed how life insurance carriers were struggling with the long term care market. Check out the post if you want to catch up.

As the stock market dropped in 2008, claims reserves (where your insurance company keeps your premiums) dried up like a raisin. And claims were higher than expected. To offset this, almost all of these policies had a provision that allowed for a rate increase if need be. After 2008, several companies put in requests with state insurance commissions for rate increases, from 17-20% on policies that were in effect. Some companies did this multiple times.

I've always considered people who buy long term care coverage, to be "forward thinking". Unfortunately that forward thinking wasn't paying off for many as they saw their rates increase.

Also, at the end of the last post I mentioned the number one objection when people discuss LTC with an agent. The conversation usually goes like this.

Client: How much is this going to cost?
Agent: $120 a month.
Client: That's a lot of money. What if I drop dead and don't need long term care? What happens to my premium?

And that was the deal killer for many. Of course you could purchase a "return of premium" rider, but that would nearly double your premium. There had to be a better answer.




Now we have life insurance with long term care riders which are handled differently by different companies. Some underwrite the rider separately, others just underwrite the life insurance part. Some just called them "living benefits" to work around certain requirements by state commissioners. On the whole, it's just life insurance that you can use while your living.

It's life insurance that you can use for long term care if you need it. And some now have other benefits. We offer one with a critical illness component in the event of a heart attack or stroke. And the cash value can also be used as a retirement supplement. And being life insurance the rates are locked in. No rate increases!

So there's the old kind of life insurance and the new kind that you can use before you die. If you have questions or want to drop us a comment below or go to our website and request information.


Chris Castanes is the president of Surf Financial Brokers, as well as a professional speaker helping sales people be more productive and efficient. 

Wednesday, January 22, 2020

Do You Have the Old Kind of Life Insurance or the New Kind? Part 1

For many years we have had a few types of insurance. There's term life, universal life, whole life and indexed universal life, among others. They generally did the same thing, which was paying if you died and maybe building some cash value. Other than that, the differences were in rates and performance.

And then 2008 came around and the industry had a bit of a shake up. Companies offering life insurance as well as long term care began to change benefits of the latter. And as the years went by, the bond rates stayed very low, affecting dividends and profits. These carriers had to make changes.

Stand alone long term care (LTC) policies were stripped of certain benefits like lifetime payouts. Some companies got out of the LTC business altogether. Some maintain their business on the books but not writing new business, while others just sold their books to other companies.




Demand for the product, along with a slow but increasing awareness, was still there. Around this time, a few hybrid products began to get marketed. I was working at a very large life insurer at the time and we were told to poo poo any hybrid products if a prospect asked. For example, we were to compare a life/LTC product to those TV/VCR's that never quite worked as good as a separate system.

But it did address the number one objection to buying long term care coverage. And I'll cover that in part 2, so be sure to subscribe.


Chris Castanes is the president of Surf Financial Brokers, as well as a professional speaker helping sales people be more productive and efficient. 

Tuesday, January 21, 2020

Cold Calling In Insurance (and other places)

When I first got into sales professionally I was taught to cold call and the mentality that went with it. I was selling accident plans door-to-door in rural areas of North Carolina and the hours were grueling. We'd have a meeting in the morning of a local diner and then spread out to assigned areas throughout the county.

Dropping by someone's home unannounced was the nature of the work, and many times the people were home. If someone was home, I'd go through my spiel only to be told that they wanted to wait for their spouse to come home and discuss it over. The whole scenario was dumb.



Through all of this I learned that how to introduce myself to total strangers, how to persevere through a lot of rejection, but most importantly, not to be afraid of the cold calling process. Knocking on doors was easy if you could handle people not wanting our product.

A few years later I sold office supplies for a small company. With just a few accounts I had adopted from a previous salesman and barely any knowledge of the products, I had to develop my own strategy to build a clientele. Using my experiences from the world of accident plans, I methodically worked one office building at a time, walking in with something in my hand to give out other than a business card. I would distribute our new catalog, or a sale flyer that I designed myself (this was before everyone had a computer with a word processor).

Working B2B was so much easier than calling on people in their homes and my success rate was above average when you consider the resources I was given. People were happier to see me at their businesses than their homes.

That office supply company was okay, but there was no room for growth and I didn't want to be an old guy asking people if they needed paper clips. I eventually got back into insurance again, but I decided to call on businesses to grow my book of business. Many times the sales calls result in individual policies, so it all works out.

Cold calling has gone by the wayside for most people nowadays. There are other ways to get clients, but I still use those basic skills to work a room or networking event.

Chris Castanes is the president of Surf Financial Brokers, as well as a professional speaker helping sales people be more productive and efficient. 

Monday, January 20, 2020

New Year, New Insurance Plan

As we enter 2020, one of the things we should put at the top of our list of resolutions is making sure that our families are taken care of if something should happen to us. A review of our current plan can fix any potential landmines that could impede our goal.

Years ago I met a guy, we'll call him Chad, who was a confirmed bachelor. We talked for a while and he decided that he had no use for life insurance. We parted on friendly terms and I let him know I would be keeping in touch. About a year later, I called him and everything had changed. His brother had died and Chad was now the legal guardian of an 18 year old boy who had some severe learning disabilities. Chad was blindsided by this change of status and we set him up on a life insurance plan to provide for the boy if Chad should die.

Image may contain: one or more people and meme, possible text that says 'GETTING PUMPED UP FOR THE NEW YEAR'

By checking up on Chad instead of forgetting about him, we resolved a potential problem. Chad knew he needed to do something, but kept putting it off until I called him. It all worked out.

The moral of this story is that we should use the beginning of the New Year to make resolutions, but to also follow up on our old ones as well.

Happy New Year and let us at Surf Financial Brokers know if we can do anything to help you plan your family's financial security.

Chris Castanes is the president of Surf Financial Brokers, as well as a professional speaker helping sales people be more productive and efficient.