Monday, February 17, 2020

My Own Life Insurance Story Part 2

As I mentioned in my previous post, my father's passing was left us in a lurch. It wasn't sudden or unexpected, as he had been suffering from the effect of Parkinson's Disease for years. And even though I have been a life and health agent for years, he ignored any of my pleas to let me take a look at what he had in place. And with him living in Fayetteville, NC while I lived two hours away and my sister living seven hours away, it was more than difficult to keep an eye on his affairs.

His beneficiaries were horribly out of date. Yet he managed to keep these policies up to date, either paid up or still making premium payments. Always trying to impress us with his financial intelligence, he screwed up when it came to something simple like life insurance. 

And worse, he put his family, my sister and I, in a situation that needed to be cleaned up. I can foresee myself spending hours on the phone with these carriers trying to sort out death claims that will eventually be paid to his estate. At this point we would be satisfied to cover his funeral costs, which were in excess of $13,000. (Did I mention he had an equity line on the house that he was using to pay his monthly bills? Another surprise!)

A horrible thought crossed my mind. What if he had died 40 years earlier? His insufficiently low face amounts would have probably forced us to move from our home. College would have been a "maybe" for me. My mother, who was a great home maker but had few marketable skills, probably would have been forced to enter the job market. 

These are the reasons why agents like myself ask a lot of questions when we sit down with a family to discuss life insurance coverage. And a good agent will get an answer and continue to drill down for more answers. It may seem annoying and a bit invasive at the time, but the process of discovery is necessary to make sure that families can stay financially solvent if the breadwinner dies unexpectedly.

Life insurance agents sometimes get a bad reputation. I get it. However, the vast majority of us are genuinely concerned for our clients. We know that people have budgets, yet they also have families who will be in trouble in someone dies too soon. The question to ask yourself if this: If I were to die tomorrow, will my family be okay?

Even though my sister and I are adults and have our own families, we never expected to be on the hook for my father's final expenses. Nor did we think we would be having to sort out a tangled web of life policies. The main problem was lack of communication. My father dismissed our entreaties to go over his finances. We weren't vultures waiting for him to pass to inherit his vast empire. But we did want to be aware of potential landmines that could have been eliminated. Now we are dealing with those landmines.

The moral of the story is as follows. Let your life insurance agent help you. Take into account final expenses and the "cost of dying", as well as any outstanding debts. And even though we hear horrible stories in the news concerning elder abuse and financial fraud, most adult children are caring and should be trusted. 

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, February 14, 2020

My Own Life Insurance Story Part 1

My father died this past Sunday after a long battle with Parkinson's Disease. He was the kind of person who would never answer questions when it came to his personal finances, especially when his son was an insurance agent. When I would mention life insurance he would grunt something like "There's plenty for you, don't worry about it." Unfortunately, there wasn't plenty for anyone.

After spending hours going through his personal effects, my sister and I found a few inklings of policies here and there. The face amounts looked extremely low, like $1000 kind of low. Some of the policies were paid up in the 1970's (not a good sign) and in it all, there was no rhyme or reason to any of it. But that's the way he did things.

I cobbled together any and all evidence of policies that could be in effect and took them to the funeral home where my father had "pre-planned" his wishes. And that's all they were. Wishes. No contracts had be signed, not a deposit or anything else. He had chosen his casket (a very expensive one) and a few other items, and had been given a price. The funeral director did his best to honor those prices, but inflation had taken it's toll. He told us he would give the insurance information to a lady in his office who would do some investigating. The moral of this was that pre-planning was not the same as pre-paying.

When my mother-in-law, who resided outside of Charleston, SC, passed away several years ago, she had a policy for $75k. We signed a few forms to assign the policy to the funeral home. The funeral home got their share and the remainder of the policy went to the beneficiaries. It was a seamless process and worked marvelously. If only everyone would think this through.

The irony was that after my mother-in-law passed away, I had related the story to my father, letting him know how easy the process was for my wife and her siblings. The talk must have fallen on deaf ears because he failed to take any action that could have improved the situation that was yet to come.

So here we were. My sister and I, along with our spouses, were confused about my father's burial plans.The lady at the funeral home was thorough and did lots of research by reaching out to the insurance companies and explaining our dilemma. We found out that two of the polices, one of which was paid up and the other in good standing, both hadn't had a beneficiary update in years. My mother as well as my paternal grandmother, were both listed as beneficiaries and were both long dead. Again, if he had just let me take a look at things I would have spotted the problems, not that I'm super smart. As an agent who has been in the business for many years I know what to look for.

Yet another policy, which was in force and up to date, had by father's business as a beneficiary. The business had been shut down three years earlier. This whole affair was beginning to look more like a bad train wreck than a way to cover the expenses for burial and other related costs. 

In Part 2, I'll give you more of this story.

 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 10, 2020

The Doctor Who Won't Listen

Have you ever seen those so-called "financial experts" on television. They have books and infomercials all about changing your financial situation by following their plan. Heck, one isn't a financial expert at all, but a travel agent. But the best part is that no matter what your situation is, their generic advice is going to set you on a path of financial success!

The truth is that people are not in the same situation. A wealthy couple with a large estate to leave their heirs has a different set of problems than the single mother struggling to pay her bills. And just telling them both to "buy term life insurance and invest the difference" makes no sense.

Imagine for a minute if you went to the doctor and all he talked about was a new wonder drug that was awesome and could treat a serious condition.  The only problem is that you don't have that condition.  At first you are polite because the doctor is very enthused about this new drug, but soon you become irritated because you need help with something else. The doctor won't have any of it and insists that you follow his orders. 

If this happened in real life that doctor would be run out of town on a rail and deservedly so. If an insurance agent were to sell their clients the same policy, despite whether they were young or old, employed or laid off, healthy or sick, they would be guilty of  "financial malpractice".

We in the insurance industry can become guilty of the same thing as this doctor.  We find a product, for instance a disability policy, and start investing our time (as well as the client's) into that product, instead of listening to the client and finding out what they really need.  In the end, the client isn't happy and the agent doesn't make the sale.

There's a better way, but the client has to meet the agent halfway. Many people don't want to discuss their personal situations with someone they barely know. And there are those who only want to talk to strangers. They feel as if they'll get a more objective opinion. Either option is good, but let your prospective insurance agent know what's going on. Issues like business succession, special needs children and budgets can help your agent get a better feel of the situation and help you remove potential landmines in your financial gameplan.

In our agency we take the approach that we have to ask questions. Sometimes it's like pulling teeth, but in the end, we do what is right by the client. And one way is by having a full suite of products that can help. Some people may not need long term care, but they may have a need for a Short Term Home Health Care plan. Or a cancer plan. Or disability insurance. 

We have helped clients from Charlotte to Charleston to Richmond and even in the state of Maine. They know that we are not going to prescribe a generic solution for all of their pain points, but will take the time to learn what their needs are and how to address them. And all of this is done without pressure. 

One way we make it easy is by making our calendar accessible. Set your own appointment and we'll give you a call to get you started. This is another reason we have been called the "coastal Carolina insurance experts". 

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.

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.