September Is Life Insurance Awareness Month

The life insurance industry has designated September as Life Insurance Awareness Month (LIAM) , which is when we in the business do our best to educate people about the different type of policies and the many ways they can be used.

For instance, did you know that the cash growth inside a permanent life (universal or whole life) is tax-deferred?  Or that traditional life universal life policies' growth is based on interest rates?

As part of the promotion, Brooke Shields is once again the spokesperson for LIAM. She saw firsthand the unique challenges that arise when someone passes away without life insurance when she served as an executor of a friend's will. 

And now, with the reality check provided by the pandemic, Brooke's message is that there is no time to wait. People need to protect their families with life insurance now. But don't just take my word for it. Check out the video. 

With this in mind, it makes sense that the theme for this year's LIAM is "Reality Check: The time for life insurance is now!" Life changes quickly and priorities shift. Life insurance can help you protect your loved ones financially-now and for the future. Get it now. 

How many friends and family members would you guess have life insurance? Do you have it? The answer is that only 54% of households have life insurance. And 44% of people believe they would struggle to pay living expenses within six months if a primary wage earner died. (Alarmingly, 28% said they would feel the strain within one month and 11% would feel it within one week, according to a 2020 Insurance Barometer Study/LIMRA. 

Knowing the benefits of life insurance, as well as the risks of going without it, why do so many households remain underinsured? Maybe it is because so many people just do not understand how life insurance works, the cost and the benefits. 

The perception: They think life insurance is expensive.

The reality: It really isn’t. Many people can be insured for the price of a daily cup of coffee.
The recommendation: Book a phone appointment to one of our representatives at Surf Financial to get a free life insurance quote. Or check out our free quoting tool in the upper right of this page. We’ll work within your budget to develop a plan that’s right for you.

The perception: I don’t need life insurance.
The reality: Life insurance has more uses than you might think. It can cover bills, pay for funeral costs, replace income in a household, serve as an inheritance for a loved one, fund a child’s education, provide an important donation to a charitable organization and so much more.
The recommendation: Everyone could benefit from life insurance. Consider the impact you make- providing wages, caring for your family members and friends, volunteering for local causes and more. What would happen if it stopped? Life insurance can help your loved ones avoid a financial burden.

If you have questions about the types of life insurance or the ways to use it for estate planning, tax strategies or other uses, please let us know. With all the crazy things going on in the world right now, the one thing you can depend on when it comes to the financial security of your family is having a proper life insurance policy in place. Covering you, as well as your family, could be one of the greatest gifts you can provide for you loved ones. 

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!

Are You A Client Or A Patient?

Earlier this week I was chatting online with a sales guru who posed a question on his Facebook page. The question was "Do you have clients or customers?" Only a few people responded so I felt obligated to jump into the fray with "I'd love to call them patients, but the law says I have to call them clients."

The sales guru immediately responded, wanting an explanation for my comment. I told him that as a doctor promotes "wellness" and preventing disease, I like to tell my clients about "financial wellness", but instead of preventing disease, I help people find the potential problems they will face in their financial plans and remove those hurdles. Needless to say, he was impressed.

It all reminded me of the old concept of thinking holistically. When another insurance agent tells me they only sell one product I instantly cringe. "Specializing" in my world is an issue, because if all an agent sells is, say term life insurance, then he or she is not addressing all of the other potential landmines that could be in front of the client. 

Thinking holistically means looking at as many scenarios as possible, prioritizing and facing them head on. 

Would you go to the doctor that only prescribes one thing for all of his/her patients, or do you want the doctor to give you a complete check-up and get to the root of the problem?  Of course, you'd prefer the latter option. So why would you want to deal with a financial advisor who only sells mutual funds or an insurance agent who thinks everyone should "buy term and invest the difference"? 

Can you imagine going to a shoe store that only selsl size 7 shoes? What if you need a size 10 or a size 5? Making your foot fit "one way or another" does you no good. With that logic, if you need a disability policy, the agent who only sells term life is useless.

Our philosophy is that every investment and insurance product has a need somewhere, but not everything is for everyone.  An indexed universal life may be a great fit for someone, where a term life may fit the bill for someone else.  When certain financial "experts" give blanket advice in the media, they are doing a disservice to those who take that advice to heart.

Which is why we want to talk to you. We want to know what your goals are, what is important to you and, of course, what your budget is, so we can find the right insurance product for you. By doing a little fact finding and asking questions, we can find the solutions to solve your insurance needs. That is what we do. 

No two financial gameplans are the same.  People are different.  Their needs are different.  Their loss tolerance levels and time horizons are different.  At Surf Financial Brokers, we take the time to find out what your goals are - personal, professional and financial.  From there, we start a conversation that can change as situations change.  Events like the birth of a child, loss of a job or elder care make a financial plan a moving target.  

Let us help you with a free consultation. We have even made it easier by adding our calendar to the Surf Financial website. You can schedule an appointment that works for you and one of our agents will give you a call, with no pressure whatsoever. We just want to ask questions that will help us understand what your goals are and make "financial wellness" work for you.

 

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!

Do I Need A Short Term Health Insurance Plan?

Everyday people all over the country start new jobs and are told they will have to wait 30, 60 or 90 days before their health insurance kicks in. Many of these people may have had to pay for their health insurance through COBRA, which carried their coverage over from their previous job. COBRA is not cheap and the employee may not be able to afford to keep it. On the other hand, the employee may not have any coverage at all and will have to wait, hoping not to get sick or hurt, for their new benefits to start.

Either way, there has to be a solution. Back in the pre-Obamacare days, we had a temporary solution called Short Term Health Insurance. It was designed specifically for those people who had lost coverage through work and had a gap in coverage until their new benefits could start. Unfortunately, when the new ACA rules became effective, short term plans did not qualify under the rules, which meant that tax penalties from the federal level could be levied. The Obama administration also put shorter limits on how long a temporary plan could cover people. 

In 2018, the Trump administration announced its intention to reinstate the previous time limits for temporary health plans. By making some changes in the mandate and tax penalties, short term plans became popular again. 

With all of this in mind, the question you may ask is if short term health insurance is for you. It may be if you are:

• Not able to apply for the ACA plan during open enrollment or you did not qualify for a special enrollment period
• Waiting for your ACA coverage to start
• Looking for coverage to bridge you to Medicare
• Turning 26 and coming off of your parents' insurance
• Between jobs and waiting for your benefits to start at your new job
• Are healthy and under 65 years old

Note that last bullet point. Unlike ACA plans, there is no coverage for pre-existing conditions. These plans are fully underwritten, so if you already have health problems these plans may not be a good fit for you. Also, they are limited in their coverage. You aren't going to find maternity coverage or a lot of prescription benefits here. Consider these plans to be a Band-Aid to help with major expenses while you are waiting to get on a employer sponsored plan or an ACA plan.

There are some benefits to these plans though. With short term health insurance you can:

• Get covered fast, as soon as the day after application
• Pick your deductible amount from several options
• Pick your length of coverage, from 1 to 12 months, depending on your state
• Drop your coverage with no penalty if permanent coverage becomes available
• Apply for another short term plan when the first one ends if you need to
• Have generally lower premiums

NOTE: Even though these plans are permissible from a "federal" level, state requirements may still vary, so check with your local agent. 

It is true that you may be able to save money with a short term health insurance plan. Just be sure to know what you are buying and that it is a good choice for you. For the right situation, short term health coverage can definitely provide fast, flexible, temporary health insurance coverage that fits your needs. 

If you have questions, drop us a note. We aren't licensed in each state but we hope we can point you in the right direction. 

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 Risk Your Retirement Savings Over A Steak?

I recently received a postcard invitation to a nice local restaurant as part of a "retirement seminar". You may have found one of these invitations in your mailbox as well. The enticement of a nice steak dinner is alluring, but you really aren't sure what topics the talk will cover and your curiosity is piqued, so you decide to go.

When you get to the restaurant you notice that most of the other invitees are older. Most are already retired, which is odd since this is supposed to be about planning a retirement. Something just doesn't seem right, but you're getting a free meal so it's okay.

As the speaker begins his talk you realize that this is a sales talk. A woman walks around the room with an appointment book and when she gets to your table she asks when you would like to meet with the "planner". "And don't forget to bring any paperwork from your current financial professional."

The speaker tells the room how risky investments are, how global turmoil is going to get worse and basically the world is going to hell in a handbasket. He or she may even have a "team" of professionals, like attorneys and accountants who back the claims of the pending financial apocalypse. 

So what is this whole steak dinner getting you?

In a nutshell, what the whole presentation will boil down to is that you need an indexed annuity.  Or do you? But first, what is an annuity?

Annuities are products offered by insurance carriers in which you give them a lump sum of money and they promise to give you a stream of income, which usually takes place 5, 7 or 10 years later. I have maintained that all insurance products have a need with some people, but not all people need every product. An annuity is great for a certain segment of the population, but in truth, not everyone needs one and in a low-interest environment like we have now, it may not be worth it.

In a previous post entitled "CD's vs Annuities In A Low-Interest Environment", we examined the mechanics of an annuity and who should (or shouldn't) purchase one.  Let's take a nice easy example of how this works.

Let's use the example of a 55 year old person with $100,000 to invest.  In our scenario we will assume that the cap on the annuity is 6%.  That means that's the most the contract will earn in a given period, typically annually.  Using a formula called the rule of 72 we can determine that it would take 11.9 years to double the money.  So we have $200,000 at the age of 67.  At that point, we annuitize the contract (get a payout) of 5% or $10,000 a year for a lifetime. 

To get the original $100,000 back we're waiting another 10 years, which means the client is now 77 years old. Our client, on the best day, waits 22 years to break even!  And we haven't figured in the rate of inflation either.  

Unfortunately, the annuity contract with a 6% cap doesn't guarantee you that rate.  That's just the most it will pay if everything went perfectly, which we know isn't the way the world works.  In this environment, it's safer and smarter to go with either a short-term annuity and wait for interest rates to rise, or to look into a variable annuity with a much better potential for growth. Or put the money somewhere else altogether. 

I recently showed a few friends of mine this example. More than a few were disappointed in the numbers. Some said they could put the money in other investments like real estate and get better, not to mention quicker, returns. The low interest rates which affect the caps were the main issue. My informal survey did yield a consensus that an annuity would be a good fit for a very conservative person. 

My advice to people is that if you are interested in an annuity, never put more than 50% of your assets into it, as they have serious liquidity issues as well as a lot of built in fees and charges. 

Go ahead and enjoy the free dinner, but of course, call us before you make any decisions.

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!

Insurance News You Can Use

Recently a few items of interest crossed my computer screen and I thought it would be good to share with you some news from the world of life and health insurance. As they say, knowledge is power, and being a knowledgeable consumer of insurance is always a good thing. So here are a few bits of news with a sprinkle of my comments mixed-in.

Let's begin with some troubling news from North Carolina. The insurance commissioner there, Mike Causey, has levied a penalty of $1.1 million on Gerber Life for claims processing violations and delays. The company is also paying $2.5 million in additional recoveries and interest to claimants. 

The insurance commissioner's office examined around 300 claims from over seven years, and they found a lot of violations with Gerber Life's accidental death and dismemberment policies. According to US News and World Report, "Biological parents were initially denied benefits for children and had to send in clothing receipts and other unnecessary documentation to prove a parent-child relationship." 

Also, the claimants had to sue to get their benefits and the company didn't pay for any of the attorneys' fees, nor did they pay interest on untimely paid claims. 

My thoughts on this are as follows: This is the kind of thing that makes my job harder than it already is. Mistrust grows from news of a company not wanting to or dragging their feet when it comes to paying claims. I'm glad that the insurance commissioner's office was able to find this problem and fix it, but that's just one insurance commission out of fifty. Are we to assume that Gerber Life only dragged their feet paying claims in North Carolina? 

In other news, one of our carriers, Guaranteed Trust Life, is changing the age eligibility requirements for their Short Term Home Health Care plan. Beginning September 3, 2020, the minimum age will be raised to age 61. The rest of the policy will remain the same with benefits like a prescription card and access to their  "Ask Mayo Clinic" symptom assessment tool. 

From my perspective, I love this policy, but I wish they didn't raise the age. Statistically, about a third of people who are chronically ill are under the age of 65. As many people in their 40's and 50's see their parents need care and realize how expensive it can be, these people begin looking into their options for Long Term Care and Short Term Care products. I like to call these folks "forward looking" and hate seeing their choices for good plans decrease. 

My gut tells me that the Covid-19 pandemic has affected the number of claims filed, but I'm not completely sure.

The Guaranteed Trust Life product is priced so affordably that I had many people who were not yet 60 years old interested. The good news is that the carrier offers a full line of other ancillary products such as cancer and critical illness plans that are still available to many people of all ages. 

One other bit of related news is that Covid-19 is impacting pricing and benefit options for those considering long term care insurance, according to the American Association for Long Term Care Insurance (AALTCI).

According to AALTCI director Jesse Slome, "Insurance companies are raising rates for new applicants, they are changing benefit options and in certain states limiting the ages of applicants."

With over 40,000 deaths in nursing homes attributed to the virus, it's easy to see why the insurance carriers are concerned. These facilities are overwhelmed and, as a result of the virus, also understaffed. 

As you can see, we at Surf Financial Brokers try our best to stay on top of the news in our industry. Look us up on the web and feel free to comment below. 

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!

What Is Mortgage Protection Life Insurance?

As a general agent for a life insurance company, I work with and recruit, agents from all over the country. Some sell life and health insurance products exclusively, while others also work in the property and casualty market as well. Discussing their insurance practices and learning what they do for their clients is always interesting to me. So you will understand why I wanted to do some asking when I kept hearing about "mortgage protection life". 

The problem was that every time I asked an agent about it, I would get a different answer, mostly because there are a few different kinds of policies. Some were actually selling "mortgage protection" insurance, which compensates the lender if the loan defaults. Not life insurance, but confusing because of the name. 

Next is Private Mortgage Insurance (PMI) which is a type of life insurance for conventional loans and arranged with a private company. It can increase your loan and is typically included in your total monthly payment. Typically it is required when someone purchasing a home puts down less than 20% of the home's purchase price. This policy protects the lender but you pay for it. The only real advantage to it is that it will allow you to make that home purchase if you don't have the 20% down payment.

Before the great recession of 2008, I considered selling PMI as part of my portfolio of products and asked a few agents I knew if it was worth their time. The answer was a resounding "no". Apparently people didn't like having to pay the premiums on a policy that would not benefit them. As home values were steadily increasing, the new homeowners would wait six months and having a new appraisal done on their houses. The values had increased in that short time and all of a sudden they had enough equity to drop the PMI coverage. 

Then there is "mortgage protection life insurance", which is designed to pay off the remainder of your mortgage if you were to die. Now this one actually is life insurance. In a nutshell, this is a decreasing term policy, which means the face amount of the policy decreases as the principle of decreases. 

You would think that a policy with a decreasing face amount would be a bargain. Unfortunately it isn't always. One of the problems is that these policies are not usually fully underwritten. There may be a minimal amount of health questions but for the most part you can be fairly unhealthy and still have a policy. This puts additional risk on the insurance company and they put that risk in your higher premiums.

Yet another problem is that the face amount decreases. And it won't coincide with in sync with the principle owed. Who wants that? Also, what if you refinance your policy and have to start another 20 or 30 mortgage? What a mess!

If you are a healthy person who does not use tobacco you are more than likely to be better off by purchasing a traditional life insurance policy to cover your mortgage. Because it is fully underwritten, your rate can be much lower. Who doesn't like lower premiums?

But the better part is that the face amount is level, which means you don't have to worry about getting less coverage as your policy continues. So if you were to die in year 3 or year 18 of a 20-year term policy, your family would receive the same amount. That extra money (assuming your family uses the bulk of the proceeds to pay off the note) could go for education costs or just replacing your lost income.

It took me several months to get this through the head of a new agent I met from Nashville. He had been working getting referrals from a local mortgage brokerage company and was afraid he would upset them if he didn't sell the decreasing term. Eventually he came around and found out that most of his clients would get a better deal with a traditional term life insurance policy. 

In the next post I'll go over some of the non-traditional policy terms we now offer. 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!

Do You And Your Partners Need A Disability Buy-Out Plan?

In a previous post I discussed buy-sell agreements between business partners and why they were necessary. To recap, in the case that a business partner dies, the surviving partner will more than likely want to buy out the deceased partner's interest, and to do that they may need money. With a life insurance policy in place for that purpose, the surviving partner will have the funds needed, thus avoiding a scenario where they are in business with their partner's spouse or other family members.

With that in mind, let's take a look at a similar scenario. For this example, we will name our business partners Bob and Neil. Both are married and have their own families, live in nice middle class neighborhoods and are making enough money to pay their bills while stowing a bit into a retirement account. 

One evening, Bob in on his way home and a car crosses the center line, hitting Bob's vehicle. Fortunately, Bob survives the crash, but unfortunately, he is severely injured. Bob is more than likely going to be permanently disabled and will not be returning to work. 

Luckily for Bob and his family, he had purchased a Disability Insurance (DI) policy early on and will have some income to help pay his personal bills. But what about the business? And what happens to Neil in this situation? Will Neil have to do the work for two people and split the profits with his now disabled partner? 

Here again, a good buy-sell agreement needs to be in place beforehand. This legally binding agreements sets the terms and conditions of the sale and the subsequent purchase of the disabled partner's ownership of the business. Having an insurance policy in place helps fund the buy-out, and can also help pay the disabled partner's bills. 

The payout can be distributed in a lump sum, monthly disbursements or a combination of both. This can be decided at the time of purchase.

In some instances the company pays the premiums for the policy. However some smaller businesses will do a "criss-cross" agreement, in which each partner pays the premiums and receives benefits from the disability policy covering the affected partner. 

After an illness or injury occurs, an elimination period, has to be met before benefits are paid. This elimination period is a waiting period that can be a few months or as long as a couple of years. Think of an elimination period as your deductible, but in time rather than money. And just like your car insurance, the higher the deductible, the cheaper the premiums will be. 

Having a buy-sell agreement avoids a lot of potential issues that can occur if a partner is sick or hurt and unable to work. This plan can prevent a financial loss or even bankruptcy by keeping the business afloat. In turn, this helps keeps those on the staff of the business employed as well. And the owners can be assured control of their business decisions, with the freedom to replace the injured owner with a person of their own choosing. Not to mention that they will not be forced into business with any family members of the disabled partner.

Since the purchase price of the business was stipulated in the original buy-sell agreement, the disabled partner should feel he or she was given a fair market price for their share in the business. I usually suggest that the numbers be updated every few years to keep up with the growth of the business.

If you have business partners and would like more information on how to fund a buy-sell in case your partner dies or becomes disabled, let us know. 

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!