Video: Funding a Buy-Sell Agreement with Life Insurance

July 28th, 2020 No comments

Categories: BlogAnimate, Life Insurance, Videos Tags:

Woes of a Fee-Based Life Insurance Consultant

July 21st, 2020 No comments

Why are policy owners so reluctant to pay for these services?

I’ll admit it.  I get frustrated at times.  I’m a fee-based consultant brought in by attorneys, CPAs, trustees, financial advisors and family offices to review, create, fix and do whatever else is needed regarding life insurance products and concepts.  I’m approached to analyze policies and programs already in force for years or even decades, and sometimes it’s new proposals that I’m retained to opine on.

History Can be a Guide

I’ve been around long enough to say “I told you so” a lot.  When I first started doing “policy audits” 20 years ago, which was already 15 years into declining interest rate markets, most policy owners and their advisors hadn’t seen many, if any, examples of underperforming whole life (WL), universal life (UL) and variable life policies.  Few people understood how modern life insurance worked and how the interest rate markets affected it, so few even looked to monitor, let alone manage, life insurance policies and portfolios. For full post, click here…

Categories: Life Insurance Tags:

Speaking to Clients About Premium Financed IUL Policies

June 16th, 2020 No comments

It’s important to understand the details and risks. This sample letter may help clients and advisors alike.

 

Dear Ms. Prospect:

It was good to speak with you yesterday morning about the proposed supplemental retirement plan, and I thought I would follow up with a couple of comments. As we discussed, I’m very familiar with indexed products and premium financing. I believe there are appropriate times and places to use the product and strategy, and there are times when it’s not.

Prospective consumers need to fully understand what they’re getting into on both the product and the strategy side. They need to intimately understand the variety of risks. A general rule of thumb is that they should be able to pay the full premium out of pocket but choose to finance it because they’re comfortable with the risks and have the ability to buy themselves out of trouble if trouble shows up (and it does too often). Finally, they need the policy meticulously managed until the day they die.

The proposed product is a newer policy design, and some feel it’s too aggressive. I have access to a tremendous amount of analysis regarding the policy that I’d be happy to share. One reason it’s popular in the premium financing world is because it was created to illustrate very strongly and to win the illustration wars. This doesn’t mean it’ll actually perform successfully. For full post, click here…

Life Insurance in the Coronavirus Era

June 2nd, 2020 No comments

Categories: BlogAnimate Tags:

Coronavirus-Related Life Insurance Considerations

May 12th, 2020 No comments

Things to keep in mind.

While some insurance carriers are implementing virus-driven underwriting changes, I’ll focus on other issues to think about during the COVID-19 pandemic regarding life insurance. Most, if not all, of these issues are applicable during normal times, but it might be easier to get attention now.

Cash Flow

I recently read a statistic about the percentage of people feeling a cash flow crunch as a result of layoffs and the disruption of business. It’s to be expected, even for the most responsible of us. Even those not in a real crunch now are choosing to delay mortgage payments and discretionary purchases simply because there’s too much uncertainty moving forward.

What should policyowners keep in mind now? If they’re in a cash crunch and life insurance premiums prove an undue burden, there may be

options, but they need to be understood and enacted appropriately. Many life insurance policies can handle not having premiums paid for some period, but policyowners better be sure, and often they don’t know if that’s the case. Also, and this might sound strange, depending on the kind of life insurance, they better not pay the premium the right way. For full post, click here…

Categories: Life Insurance Tags:

Coronavirus, Preppers and Life Insurance

May 4th, 2020 No comments

Can the current situation help us focus on priorities?

I don’t think of myself as a prepper, but not everyone agrees. My truck has a toolbox, fire extinguisher, jumper cables, flares, extra oil and antifreeze, a medical kit, tow straps, a water filter and more. Some might roll their eyes, but when something is on fire, literally or figuratively, they tend to look in my direction. Yes, my Wrangler looks like an apocalypse response vehicle, my basement has its share of home canned goods, and people joke about heading to my house during a disaster, but it’s only a joke until it isn’t.

I’m not racing to the store now to stock up on anything, and that’s a nice feeling. What does this have to do with life insurance? Quite a bit. Why am I thinking about it now? A year ago, an executive I met started asking me about his life insurance as his term policy was close to expiring. Life gets in the way, and I didn’t hear back from him for quite a while. After he reestablished communication, I learned he was prompted into action after his 50-some-year-old brother-in-law, a professional himself, died suddenly leaving a wife and three children at home … and no life insurance. I see this more often than I care to say. For full post, click here…

Categories: Life Insurance Tags:

Corona Virus, Preppers & Life Insurance

April 27th, 2020 No comments

Categories: BlogAnimate Tags:

Insurance Policy Loan War Stories

April 24th, 2020 No comments

Why it makes sense to understand what’s going on when refinancing.

After writing a few pieces on loan refinancing, I’ll now share some examples. Over the years, I’ve seen many situations in which policies have significant loans. These include whole life (WL) policies, universal life (UL) policies and others. Some are modest, and the policies can handle the loan, while others are overwhelming and will drive the policies into the ground. Some have reasonable rescue strategies, and others are all but loss causes.

These situations often involve a lack of understanding about how the policies fundamentally work, how loans affect the contracts and how to manage the policies over time. In some situations, the initially chosen policy management features, which have caused the problems to escalate over time, have never been changed. Sometimes I’ve been able to simply make a dividend option change, and a failing policy can be self rescued with the trajectory of the cash value, loan and death benefit reversing itself over time. For example, when a policy has an 8% loan interest rate in today’s market, why would a dividend option be set to buy additional paid up insurance while ongoing premiums are added to the loan and loan interest accrues? Again, it’s a lack of understanding and too often an abandonment of the policy owner by the agent. What may have been true a number of years ago may not be true today given the meaningful changes in the financial marketplace and policy crediting. Policy management is an ongoing responsibility. For full post, click here…

Categories: Life Insurance Tags:

Refinancing Life Insurance Loans – Scenarios

April 20th, 2020 No comments

Categories: BlogAnimate Tags:

Refinancing Life Insurance Loans by Bill Boersma

April 1st, 2020 No comments

Categories: BlogAnimate Tags: