The Final Expense Alternative

We have all seen the ads on TV for Final Expense insurance, which helps you pay for burial expenses. Most of these ads are for whole life insurance and can be more expensive than you'd expect. And most of the time the coverage is not enough.

When calculating final expenses, most people just consider the cost of a funeral. However, a missing cost are costs associated with dying. Many people don't just die suddenly. There may be a long illness or accident, resulting in a hospital stay and the ensuing medical bills. Not to mention other fees like attorney fees and meals (some like to eat at funerals). 

If someone is relatively healthy they can purchase a Guaranteed Universal Life (GUL) policy which may require some health underwriting, but can save a lot of money in premiums compared to the "guaranteed issue" policies seen on television. Not a lot of insurance carriers still offer GUL's but we have access to the ones that do. 

Let us help you by setting a phone appointment for a short conversation. We are your "friends with living benefits".

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. Please subscribe to this blog!

3 Ways To Set A Good Financial Example For Your Family

One of the most intriguing things I have learned in my many years of being a life insurance agent is how values are handed down from one generation of a family to the next. This is almost always true for everything, from work ethics to religious beliefs. Most notably I see it with financial practices. For example, parents who have bad credit will also have adult children who tend to be late paying bills, creating bad credit for themselves as well. 

One of the other areas where this is true is when it comes to life insurance. There are parents who don't buy life insurance because of various reasons, like thinking it's some sort of scam (yes, I've heard this!) or "Why do I need something I can't use?" (it's not for you, but for your family!). On the flipside of this, I have clients who know the value of life insurance because their parents had policies which paid out nicely. 

Sometimes they insists on buying whole life insurance because "that's what my mother said to buy", which is fine, but maybe a term policy is a better fit for their needs and budget. At least they're considering the purchase for their families. That's the first step in making sure that if something should happen their surviving loved ones will be financially secure.

I often hear stories from clients about how life insurance helped them. My wife is a great example. Her father passed away very unexpectedly when she was still in high school. He had a large policy that helped her and her siblings pay for college and pay many of the outstanding bills. We even used some to the proceeds years later to put a down payment on our home. Now my wife tells people how that policy was helpful, even though she doesn't sell insurance.

Too often, however, I hear stories of families struggling to make ends meet when one of the breadwinners in the family dies too soon. You can easily avoid leaving your loved ones all kinds of bills, like outstanding debts like mortgages, credit cards, car payments and funeral expenses. Shifting the burden of covering all those bills to a life insurance policy will give you and your family the peace of mind that lets you sleep well at night.

I often hear stories from clients about how life insurance helped them. My wife is a great example. Her father passed away very unexpectedly when she was still in high school. He had a large policy that helped her and her siblings pay for college and pay many of the outstanding bills. We even used some to the proceeds years later to put a down payment on our home. Now my wife tells people how that policy was helpful, even though she doesn't sell insurance.

On the other hand I also hear nightmarish stories about families struggling to pay bills and wondering if they can afford to stay in their homes because one of the breadwinners failed to take care of something as simple as buying a life insurance policy. 

About a year ago I met a young widow whose husband died suddenly in a traffic accident. He left a ton of debt, including payments on a muscle car that she eventually sold at a loss because he was upside down on the payments. Her son, a bright kid who was about to graduate from high school, told me "I probably won't go to college because we just can't afford it." He is having to go with his "plan B" which is to enter the military and use the GI Bill down the road.

Making the purchase of a policy can be the deciding factor in whether or not your family can afford to stay in their home, go to college, or just pay off any debt you may have incurred. And life insurance is much less expensive than you may think. Here are a few steps you can take to make you a hero long after you are gone.

1. Go to our website and get a quote. Find a policy that fits in your budget.
2. Not sure how much life insurance to get? Use the "calculate" button to see how much coverage will be needed.
3. If you see a policy you like you can start the application immediately. 

By letting your family know they are taken care of if something should happen to you will send a great message to prepare for the unexpected. It's that easy. And if you have a question, you can just drop us a note. 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!

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!

The Life Insurance Review

Life insurance is like your car, your home and a lot of other things you own in that one has to do "maintenance" on it from time to time. By that, I mean that one shouldn't buy a policy, throw it in a drawer or safe deposit box and forget about it. An owner of a life insurance policy should take a good look at it at least every other year to make sure it is doing what is needed.

One of the many mantras that life insurance agents love to repeat is the word "review', as is "We need to review your policy." In sales classes, agents are taught to contact their clients twice a year - on the birthday of the client and on the anniversary date of their policy. The former is mostly to check in and hope the client will have some referrals. The latter is to set an appointment with the client to go over their policy, thus the "review". 

As an agent who has been in the business for a while, I can attest that a vast majority of clients say something like "I'm good for now" when I mention taking a look at their coverage. Maybe I should press harder for that appointment, but it's obvious the client isn't interested.

Unfortunately, this goes on every year and on occasion something will go sideways when the insured dies. Whether the client doesn't have enough coverage or just failed to keep the beneficiaries up to date, I know there are adjustments that can be made.

A good example is when a beneficiary change is in order. In that instance, either the named beneficiary has passed away unexpectedly or should be replaced for other reasons. A few years back I found out that my client's daughter, who was in her 20's and had a history of drug issues, was living on the streets. My client was taking care of her grandchildren with the help of another adult child. 

It was an awkward subject to broach with my client as I had heard about her predicament through the grapevine, but she was gracious as I let her know that she was doing the best she could with a bad situation. She acknowledged that her daughter probably was not a good candidate to receive a large death benefit and we changed everything over to the other adult child, who ultimately got legal custody of the kids.

In another instance, I met with a client who had taken out a policy for $250,000 a few years earlier. At the time, the face amount made sense because it covered the balance of his mortgage and could help pay off some items like final expenses and some credit card debt. He had some money put away and his wife also had a good job. However, he had some unexpected expenses that required he borrow some funds, and the lender was insisting he purchase a life insurance policy to cover the debt.

By checking in with him and learning about his new situation, I was able to help him secure the note with a 10-year term life insurance policy which made the lender very happy. (Sidenote: My client paid off the debt earlier than expected and was able to cancel the policy.)

If your life insurance agent calls you for an annual policy check up, take advantage of it. And if your agent doesn't call to check in with you, give us a call and we'll be happy to put a second set of eyes on your policy to see if you have what is appropriate for 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!

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!