Bill Boersma: On Life Insurance

Now, what about actual rules companies have for how they underwrite relative to death benefit levels?

These terms and processes are all about Reinsurance. Effectively all insurance companies reinsure their larger risks. There are relatively few reinsurers in the market and regardless of the insurance company name on the cover of your policy, if it is large enough, they are mostly reinsured by the same reinsurers. In other words, whether it’s $5,000,000 with ABC Life Insurance Company or $100,000,000 with XYZ life Insurance Company, neither may be interested in paying out the entire death benefit from their own pocket when the insured individual dies. Read more…

One of my most popular posts was in June of 2012 when I wrote about the definitions of some commonly used but often misunderstood and confusing policy terms. This entry is kind of a sequel to that.

Many advisors and their clients come to realize that the “fun” is just beginning once the decisions on amounts and types of life insurance are made. The underwriting process can be a virtual carnival of frustration; partly because so few people seem to realize all that goes into it, what to expect and how to prepare for it. Read more…