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Letter of Explanation – Premium Financing

December 20th, 2018 No comments

Following is an email I recently received:

Over this past year I have been contacted several times (by parties that I respect) asking me to get involved with Premium Financing…    The pitch is compelling – that Indexed life insurance is great (a game changer); that some carriers offer immediate surrender free CV of 100% of the premium deposit(s); that super large banks are happy to do the lending…   on and on…

I just read your take on this and I respect your opinion…     Could I ask you, if I was to get involved, what insurance companies or financial firms do you think are respectable and experienced (and doing the best job) in this specialized arena? For full post, click here…

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Saving Money on Life Insurance – Part 3

December 19th, 2018 No comments

The real-life effects of premium funding differences.

Trying to save money on life insurance may not be a good idea (as discussed in Parts 1 and 2 of this series).

The underlying expense structure and chances of a policy having a life expectancy longer than the insured individual is often determined by how much goes into the contract. Why not go a step further? What about evaluating a life insurance transaction like any other investment opportunity? For full post, click here…

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A Life Insurance Primer: Life Insurance Basics by Bill Boersma & Marty Shenkman

December 18th, 2018 No comments

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Success Stories: A Plain Jane Policy Analysis

November 28th, 2018 No comments

An estate planning attorney introduced me to a client of his who was the trustee of her parent’s irrevocable trust that owned a $4 million dollar second-to-die policy. As is typical in these scenarios, the trustee understood very little about the insurance and her father was the one “in charge” of the policy over the years but he didn’t under-stood it much better.

To anyone who does something every day, it may be bewildering that their respective specialty is so entirely misunderstood by others. So it is with life insurance. I understand it can be a mystery to many, and in some ways it is ridiculously complicated, but I am often reminded that I can take nothing for granted when working with consumers.

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This case was as typical as an engagement can be. The $4,000,000 in death benefit was not projected to last as long and Mom & Dad were expected to last and they wanted and needed guidance. For full post, click here…

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Saving Money on Life Insurance – Part 2

November 20th, 2018 No comments

The real-life effects of making certain money-saving changes to your policy.

My last piece was about life insurance and pricing and hopefully left people thinking that cheaper isn’t always better. I want to expand on that. We’ll keep looking at the 50-year-old preferred non-smoking male and a $1 million indexed universal life policy run with $7,842, $8,115 and $11,360 premiums.

The Conundrum: A tiny additional bit of premium can hypothetically reduce policy expenses dramatically and subsequently allow the policy to last longer and be less susceptible to market forces. However, the lower funded policies may have a hard time actually staying alive longer than the insured individual, even if the sales ledgers suggests otherwise. For full post, click here…

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Does Your Client Want to Save Money on His Life Insurance?

November 15th, 2018 No comments

Remember that cost and price are very different things.

Certainly, almost every industry deals with the same thing but the idea of saving a buck on insurance is an entrenched ideal. Independent agents who can bring multiple offerings from various insurance carriers are exceedingly valuable but only if they understand what they’re doing and aren’t playing the spreadsheet game.

Penny wise and pound foolish is an age old axiom but just because it’s been around for a long time doesn’t mean lessons are learned. For full post, click here…

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A Life Insurance Mystery: Underwriting

November 13th, 2018 No comments

At this point, I should really stop being surprised that consumers tend to focus more on issues that aren’t particularly consequential and often ignore the most important matters. This has been reinforced recently on a few engagements.

One of these issues is underwriting, maybe the least favorite part of the life insurance process. While it’s important to do business with a strong carrier—and no one wants to pay more for something than necessary—the details of the underwriting process are a mystery to most. For full post, click here…

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Premium Financing Life Insurance in Today’s Markets

October 25th, 2018 No comments

Our clients don’t understand insurance crediting.

In the past few weeks, I’ve received more calls than usual regarding consulting and analysis for existing or proposed premium financing transactions. They’re coming from attorneys and accountants as usual, but from more family offices than ever.

Some of these calls will involve deep analysis, and in some situations, I’ve been able to have the proposals emailed to me for a quick once-over. While I’m committed to entering every situation with an open mind and free of prejudice, sometimes, at a glance, the result is self-evident. For full post, click here…

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Time Bombs of Yesteryear and Today

October 16th, 2018 No comments

This past month, there was an article on the front page of a major publication about universal life (UL) insurance policies. The article included a statement that many people “… are sitting on a ticking time bomb, and most probably aren’t aware of it.”

This reminded me of another article that said, “Today, in this period of very low interest rates, many are sitting on time bombs… Yet many are unaware…” Guess when this period of very low interest rates was? 2002! How many times since then would someone have killed for a 2002 interest rate? For full post, click here…

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Life Insurance Analysis: an Art or a Science

October 8th, 2018 No comments

DECK: Is it worth taking an undue risk to save a few bucks? 

Earlier this year, I was introduced to a policy owner by his estate-planning attorney regarding the evaluation of a survivor life policy on himself and his wife.  It was a $1 million 1995 universal life contract that was underfunded due to decades of decreasing crediting rates.

Fundamentally, he wanted to know how the policy was doing, what it would take to firm it up and if the recommendations he’d received three years earlier from a nationally recognized life insurance consultant were correct. For full post, click here…

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