Buying Coverage from "Top-tier" Carriers

Posted on March 26, 2010 by lifeinsuranceadvice

I received word today that one of the health insurance carriers in Georgia has failed. The company – Imerica – offered very low rates and comprehensive coverage, but it had very weak financials.  It is expected that Imerica will be liquidated within the next 30 days.

As an independent agent, I received several offers to represent Imerica, but I decided not to do it.  I only purchase insurance from “top-tier” carriers and that is what I advise my clients to do as well.   A company must have strong financial ratings, not only from AM Best, but from other independent rating agencies. 

It is always best to carefully consider a company’s financial strength when purchasing an insurance product — whether it is life, health, long-term care or disability insurance.   Always ask about an insurance company’s financial strength, history and outlook. 

Greg Sanders — Peachtree Insurance Advisors — 678-236-1600 — www.insuranceadv.com

 
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Can I Buy Health Insurance if I am not a U.S. Citizen?

Posted on March 25, 2010 by lifeinsuranceadvice

Health insurance carriers will offer coverage to those who are not U.S. citizens, but most of them require residency in the U.S. for a certain period of time.  The most common requirement is 6 months of living in the U.S.  

Carriers will often require proof such as rent or mortgage payments, utility payments or employment.   A few carriers require one year of residency in the U.S and one carrier (Humana) requires two years.  Suprisingly, there is only one carrier that does not require a minimum period of residency.  This carrier recently changed the requirement to make it more favorable to non-U.S. citizens.  They only require a Green card or a visa, and the applicant must plan on living in the U.S. for at least one year with no extended travel (more than 3 months).

Some carriers will rquire established care with a US physician and a recent physical.  These requirements vary according to each carrier.

Of course, there are options to obtain coverage immediately for those moving to the U.S.  and want coverage before they find a place to live or establish residency.   International coverage can be applied for through several reputable sources.  The company offering international major medical insurance that we have found to be the best is HCC Medical Insurance Services, A Lloyd’s Coverholder.  Quotes can be obtained at  http://www.insuranceadv.com/content.asp?c=297&ID=906

Whatever the situation, we have done the homework and know the eligibility requirements for ALL the major carriers in Georgia.  I often hear people say, “I was told I would be declined by every carrier because I have X condition.”  Well, the agent probably checked with a few carriers and gave up after three or four of them said “decline”.  For example, almost every carrier will decline diabetics.  The operative word is “almost”, since there is one carrier that will offer coverage in many instances. 

It is important to work with an agent who represents all the major carriers and is familiar with underwriting guidelines.  We do extensive work on the front end — called medical prescreens.  If an applicant has multiple health issues, we will check with the carriers first and then advise our clients as to the best course of action.  This results in a very high acceptance rate.

Greg Sanders — Peachtree Insurance Advisors — www.insuranceADV.com — 678-236-1600

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Vision Insurance: The Importance of Children's Eye Exams

Posted on March 23, 2010 by lifeinsuranceadvice

Most parents understand the importance of dental health and hygiene for children, but they often neglect the importance of vision health.  

A recent News Flash from Blue Cross Blue Shield of Georgia highlighted this overlooked aspect of children’s health.  The following excerpt demonstrates the importance of vision exams:

“According to the Vision in Preschoolers Study, the National Institutes of Health, the National Eye Institute and NEI Clinical Studies, vision problems are the fourth most common disability in the United States, and one of the most prevalent conditions in childhood. In addition, the American Public Health Association (APHA) recently reported that one-in-four children in kindergarten through sixth grade has visual disabilities that affect their ability to learn. Some studies indicate that 80 percent of learning in children occurs visually; yet 86 percent of children do not receive a vision exam during these formative years. ”

There are many ways to have vision exams done at reasonable  costs — with or without vision insurance.  As the father of three young children, my wife and I have looked into vision coverage extensively.   One of our children had a problem focussing while reading books.   We discovered that he had a problem with eye teeming.  That has since been resolved through a computer program designed to improve eye teeming. Our son is now doing great! 

I have also found some good low-cost options for many clients over the years. 

Greg Sanders  678-236-1600 

www.insuranceADV.com

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Health Care Reform — How will it affect you?

Posted on March 22, 2010 by lifeinsuranceadvice

Well, it finally passed.  Whether or not you are pleased with the results, it is time to pay close attention to how to adapt to the changes that will take place.

Most of the major changes will not be implemented until 2014, however, there are some significant changes that take place this year.  If you are a small business owner, with fewer than 50 employees, then you should speak with your tax professional about how the new tax credits will affect you.  Tax credits will be given to cover 35% of premiums starting this year, then the tax credits increase to 50% in 2014. 

Do you own an individual/family with children on the plan?  There are some IMMEDIATE changes you can make to save significant premium dollars.   Even though insurers won’t be required to cover children’s pre-existing conditions for another 6 months, there is a stategy that can be implemented now to take advantage of this. 

There are other significant changes that will go into effect this year:  Coverage will be extended for adult children on their parent’s policy until their 27th birthday; an interim high-risk pool will receive $4 billion; $250 rebate to help fill the “donut hole” (for Medicare recipients), no lifetime caps, etc.

If you have any questions about these changes will affect you, please give us a call.   

www.insuranceadv.com

678-236-1600

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Return of Premium Term Life Insurance — Pros and Cons

Posted on February 24, 2010 by admin

I am often asked my opinion of Return of Premium life insurance — ROP for short.  Like most products on the market, ROP can make sense for some and not for others.  When ROP products were first offered several years ago, I heard Clark Howard offer his opinion on the product and I was a little suprised by what he had to say.  He said that it was a good move for those people who are very diligent about paying their premiums on time and plan to keep the policy for the full term period.  If times got tough, and the policy had to be dropped, then the benefit of the ROP product would be lost.   Clearly, one must be confident that they will have the financial stability to keep the insurance in force.

Recently, I received the following information promoting Return of Premium term insurance:

“ROP TERM provides an incredible value when compared to a level term policy. I mean where else can you obtain these kinds of guaranteed rates of return. Please see the example below which illustrates a 7.3% guaranteed rate of return.”

Male Age 50 standard no tobacco $500,000 face amount for 30 Years. 
 
Annual Premium for a typical level term policy with no money back: $3,505
 
Annual Premium for a representative ROP Term Policy with 100% money back: $5,965
 
Annual Premium difference: $2,460
 
ROP Term Cash Surrender Value at the End of 30 years: $178,950
 
Net Cost for Protection for 30 Years: ZERO
 
Taxable Rate of Return needed to grow the annual premium difference into $178,950 assuming a 28% Tax Bracket : 7.3% 

 

The above promotion is very compelling.  It’s not easy to find a 7.3% guaranteed rate of return.  

Now, here are some “cons” regarding Return of Premium term insurance.   If the policy is dropped anytime before the end of the term period (most commonly 30 years), then the benefit of ROP is mostly lost.  With some carriers, there is a partial return of premium based on a time schedule.  However, the company pays little to nothing unless the policy is kept in force for at least 15 to 20 years.  

There are several carriers offering this product as a part of a Mortgage Protection plan.  For the most part, those plans are over-priced.  See my post on Mortgage Protection Life Insurance.   It is important to work with a company that has very strong financial ratings.  It is also important to compare the cost of the ROP product to the cost of the best low-cost term life insurance available.   We run comparisons to see if an ROP product makes sense. 

Again, even if the numbers are compelling, there are other factors to consider. The advice given by Clark Howard is sound – the total premium should be such that it wouldn’t be difficult to pay even in tough financial times. 

Not all ROP insurance is the same.  Having a thorough understanding of how the product works is essential. 

Greg Sanders  678-236-1600  www.insuranceadv.com

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Experienced life and health insurance Agents in Georgia

Posted on February 22, 2010 by admin

There are lots of knowledgeable, experienced life and health agents in Georgia.  However, there are many, many more unexperienced agents in the marketplace.   I would venture to guess that the ratio is 1:10 at best.  With our current recession and high unemployment rate, there has been a huge influx of people entering the insurance industry.  There is an extremely low barrier of entry compared to other business start-ups. It’s almost too easy to get licensed to sell insurance.  In a sense, this is good news — it provides opportunities to those who need a job and it also creates competition in the market.  The downside is that there are so many agents with very little experience, that customers often receive an onslaught of responses when completing quote requests online.  Some of these new, hungry agents will do whatever it takes to “make a sale”.   More often, they will be honest, hardworking agents who don’t have the knowledge and experience to properly advise their clients.

  It can take several years to really understand the best way to help clients and fully grasp the complexities of life and health insurance products.  Also, with an extremely high attrition rate (over 70% don’t make it past 3 years as an agent), clients can often be ”orphaned” by their agent who changed careers.  So, it is crucial to work with an agent who has at least 5 years experience as an agent. 

Look for real testimonials from satisfied clients, not just anonymous testimonials that say “Joe is a great agent and saved me hundreds – from Tom B.”  Most satisfied clients will be glad to give their full names.   Also, look for recommendations from other professionals.  A financial planner or business consultant will send many referrals to an agent who has proven they will take the best care of their clients.

 With the increasingly strict underwriting guidelines and competitive marketplace (amongst insurance companies), it is more important than ever to work with an experienced agent!

See our client testimonials at www.insuranceadv.com   Over 10 years experience serving businesses and families in Georgia.

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How to Apply for Life and Health Insurance In Georgia

Posted on February 19, 2010 by admin

There is not a single “right way” to apply for health or life insurance.  Although their are some general guidelines followed by most carriers, each carrier has it’s own set of unique underwriting guidelines.  This is why it is very important to apply for coverage with the assistance of a knowledgeable agent.  People who apply directly with a carrier or through an inexperienced agent are much more likely to get declined or receive an unfavorable underwriting decision. 

As an example, I received an email from Blue Cross Blue Shield of Georgia yesterday stating the following change: 

New Underwriting Process for Individual Business

BCBS is making a change to their process that could adversely affect the healthiest applicants.  If someone applies without receiving some guidance, they could run into delays and problems with the approval of their application.  The largest online insurance sites have attrocious approval percentages.  The reason is that they fail to take the time necessary to educate people about the increasingly strict underwriting process followed by insurance carriers.  Since they are dealing with people in almost every state, it is nearly impossible for them to stay current on all the changes in underwriting guidelines — many of which are made on a state-by-state basis. Whether it is a life or health insurance application, I stay on top of all these changes and make sure my clients complete their applications the correct way.

www.insuranceadv.com  678-236-1600

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Insurance "Red Flags" — Buying Health Insurance Online

Posted on February 4, 2010 by lifeinsuranceadvice

Recently, I helped a couple in their 60′s navigate through the maze of health insurance options.  They are currently on COBRA, but they are moving to Alabama shortly (from Atlanta).   After  their COBRA coverage expires, they will still have a couple of years before they are eligible for Medicare.  A couple of fairly serious pre-existing conditions will make it challenging to find adequate coverage in the individual market.  So, I helped them determine what options they would have for State-Guaranteed Coverage in case it would be needed.

While searching Alabama’s DOI site, I discovered the following consumer caveats:

INSURANCE “RED FLAGS”
Here are some quick “red flags” to warn you against possible insurance fraud:
  • Don’t submit to high-pressure tactics. If you are being overwhelmed with offers from a particular group or agent that make you uncomfortable or aggravated, trust your instincts and steer clear.
  • Do your research. Scam artists may try to convince you to change coverage quickly without giving you the opportunity to do adequate research.
  • Seek advice. If a particular policy requires a large sum deposit in an account, ask a third party — such as a reputable local insurance agent, an accountant or financial advisor — for advice.
  • If it seems too good to be true, it probably is!

This list of “red flags” is certainly appropriate, especially for people attempting to shop for health insurance online.   Their are many agencies that train their agents  to “close” the sale on the first phone call.  It is always best to take your time, consider your options, and make sure all your questions are answered by a knowledgeable, experienced agent. 

www.insuranceAdv.com

Greg Sanders  678-236-1600
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Term Life or Whole Life Insurance?

Posted on September 11, 2009 by lifeinsuranceadvice

Two Categories of Life Insurance

Most people make the distinction between two major types of life insurance as Term and Whole Life, but the more accurate terms are: Term and Permanent life insurance. Those are the two broad categories of life insurance; whole life is just one type of permanent life insurance.  Sometimes “whole life” and “permanent life” are used interchangeably.  With the advent of several unique product designs in the past 10 or 15 years, there are many variations of permanent life insurance which will be described below.

Term Life Insurance

Briefly defined, term life insurance is a  product designed to last for a specific period of time. The most common term products are as follows: 10-year, 15-year, 20-year, and 30-year. There are other term periods, but very few carriers offer them.  Most carriers offer guaranteed level term insurance.  Basically, this means the premiums are guaranteed never to increase during the term period.  Also, the face amount will not decrease over the course of the term period.  Some products are only guarantee the premium for the first 5 or 10 years. Be careful to avoid these products since they the cost is only marginally less than guaranteed level term.  Also, there are products with decreasing face amounts, but these products are typically packaged as “mortgage life insurance” and they are intended to decrease as one pays down their mortgage (see post on Mortgage Life Insurance).

Permanent Life Insurance

Permanent life insurance is designed to last for one’s entire (whole) life.  Often times, permanent life products, such as whole life or universal life, build “cash value” over time.  The premiums pay for the basic cost of insurance, but they also can build equity in a separate savings account.  The accumulated savings can be “borrowed” under specified conditions. In whole life products and some universal life products, the insurance company invests money into fixed income securities.  There are also variable products that allow the policy-holder to invest the money into various funds, depending on their risk tolerance.  Similar to an 401(k), the funds can be diversified into several funds.  There are many “moving parts” in permanent life insurance, so it is important to fully understand how the product works and how much certain fees (such as management fees) cost.  The purpose here is not to provide an in-depth analysis of permanent life insurance, but simply provide an overview.

A Hybrid Product: Term to age 100

There are newer permanent products that are not designed to build cash value, but strictly to provide permanent life insurance protection.  Sometimes these products are labeled “term to age 100″.  These products can be useful in situations where the insured doesn’t want to risk losing their insurance too soon.  For example, a 30 year-old might want a term period longer than 30-year, but without the savings vehicle of most permanent products.  An experienced agent can help customize a product that extends beyond 30-years.  Sometimes, people simply like the idea of having some life insurance in force for their entire life.  This can be accomplished by splitting policies between term and permanent or “laddering” policies.

The Best Choice for Most

Many financial advisors feel it is better to “buy term and invest the rest”.  This strategy is highly recommended during prosperous time – when investing in the market consistenly brings high returns.  In today’s market, however, there has been a resurgence of whole life products. primarily due to their reputation as solid, safe cash accumulation vehichles.  However, there are still those (such as Clark Howard and Dave Ramsey) who are fiercly opposed to any permanent life insurance, regardless of the economic climate.  I tend to agree with the general message put forth by such consumer advocates, mostly because permanent insurance is oversold to people who really just need term insurance. 

For the vast majority of people, term life insurance is the best product.  It is very affordable and provides the needed protection for loved ones while they are dependent on your income.  Some agents will refer to term life insurance as temporary insurance.  They are correct in that term insurance provides protection on a “temporary” basis, but this has a negative connotation.  Usually this term “temporary” is followed by the analogy of renting your life insurance versus owning your life insurance, as the agent pitches the advantages of permanent life insurance.  I think this is a poor analogy because it assumes the premium spent on term insurance is wasted, while the premium spent on permanent insurance is building wealth.  Buying term insurance accompanied by a sound investment stategy is often the best approach.

I believe there are situations where permanent life insurance makes sense.  For very high income earners looking for tax-protected growth of their investments, a permanent life insurance product can be an excellent vehicle.  There are other instances where permanent life insurance is a good option, but that is a topic for another post. 

For questions about term and permanent life insurance, please call Greg Sanders at 678-236-1600 or visit www.insuranceadv.com

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Mortgage Protection Life Insurance in Georgia — Is it Worth Buying?

Posted on August 14, 2009 by admin

If you are a homeowner who recently closed on a loan or refinanced a mortgage, then it is likely that you have been inundated with offers for “Mortage Protection” or “Mortgage Life Insurance”.   The letters appear official — as if they are sent by your lender — but in 9 out of 10 cases, they are not.  Often times, your lender will partner with an insurance company and send out an offer for Mortgage Life Insurance, but these are far outnumbered by the others.  At the bottom of the letter, there is a disclaimer stating that the loan information was obtained from public records.  Anyone can obtain these records and in Georgia (especially Atlanta), there are numerous life insurance agencies marketing to homeowners.

What exactly is Mortgage Protection Life Insurance? 

 Basically, it is a life insurance policy designed to pay off the mortgage balance in the event of the death of the homeowner.  Often times, the policy has a decreasing benefit (face) amount that decreases in direct proportion to the decreasing liability of the borrower.  Sometimes, the lender is named the beneficiary of the policy to protect against loan default.  More commonly, the policyholder names a spouse or someone else as beneficiary so that they can pay off the mortgage in one lump sum or continue making mortgage payments.

Many Mortgage Protection policies also offer riders (additional features) that include disability insurance and Return of Premium.  The disability insurance benefit is designed to pay the m0nthly mortgage payment in the event of the homeowner’s disability — the inability to work due to injury or illness.  The disability riders are not as strong as most disability insurance products, but that is another topic altogether.    The Return of Premium (ROP) rider refunds the premium paid if benefits are not used by the end of the mortgage term (usually 30 years).  It is important to read the fine print when selecting this rider because ROP riders vary considerably.

Most of what has been written about Mortgage Protection Insurance has been critical, however, these products can work for some people as described below.  What I really like is that these offers send out a good message – a needed reminder – that your mortgage is a very large debt and adequate life insurance coverage is needed to protect your loved ones. 

The Bottom Line:

 Mortgage Protection Life Insurance is not a good deal for the vast majority of people.  The rates tend to be substantially higher than level term insurance products.  A good, low-cost 20 or 30-year term policy will provide the protection one needs (Term Quotes available at www.insuranceadv.com).  Life insurance carriers will allow the face amount of the policy to be lowered by the policyowner as desired.  This can be helpful as the need for life insurance decreases over time (as the mortgage and other debts dwindle). Periodically lowering the face amount can also save money spent on premiums.  For more information on this strategy, see laddering life insurance post.

 Mortgage Protection is just a neatly packaged way to offer life insuance.  Some would say it is gimmicky and in some cases they are right.  The offer received in the mail can sometimes be misleading.  However, there are many agents who market to new homeowners, recognizing their potential need for additional protection.  And sometimes they offer legitimate products that can serve the homeowner well.

Why does Mortgage Protection cost so much?

For those who want to know precisely why Mortgage Protection Insurance costs more than level term insurance, the following explanation should suffice.

Mortgage Protection Life Insurance is typically sold as a “Non-Medical” product. Non-medical means that no physical exam (blood,urine samples, etc.) is needed to qualify. The insurance company makes the application process simple and quick by asking a limited number of health questions. Mortgage Life Insurance is generally sold with just two undewriting classifications: Standard Smoker and Standard Non-Smoker. Most companies offering medically underwritten term life insurance offer three or four Nonsmoker (NS)underwriting classifications, e.g. Standard NS, Standard Plus NS, Preferred NS, and Preferred Best NS. So, for someone in excellent health the rate for Preferred Best NS will be considerably less than Standard NS. For a non-smoker who may be overweight and taking medication for Hypertension, they might qualify for the Standard NS rate.

It wouldn’t make sense for a very healthy person (normal weight, and no medical issues) to apply for Mortgage Protection Life Insurance because they would be forced to pay the same rate as others who are less healthy. There are exceptions to this rule, but this is one reason why Mortgage Life Insurance isn’t a good option.  If someone has health concerns and does not want to get a physical exam, then this could be the way to go.  In that case, it would be best to check out the other Non-med life insurance products on the market.

If you have more specific questions, please  comment below or email me: greg@insuranceadv.com or call 678-236-1600

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