Protection Products

Take a New Look at Key Person Insurance


Protection

Key person insurance isn’t a new concept. But, that doesn’t mean we can’t take a new look at it.

A few months ago, one of my advisors had a business owner client who approached him with concerns about key employees. The concern was two-fold. First, as is typical with key person scenarios, the owner was concerned – if his top buyer were to pass away unexpectedly, what financial impact would that have on his business? And, what plan could he put in place to stem the tide and reassure his clients all would be OK? Second, due to the specialized nature of this business, if this employee would leave and go to a competitor, what would that do to his bottom line and long-term growth opportunity?

Experienced buyers are vital to this client’s business, but hard to come by. He’s lost buyers to competitors in the past, so he asked, “What can I do to entice this guy to stay with me until he’s at least 65?” We thought about it … and we got creative.

In a typical key person scenario, term insurance is usually an advisor’s gut instinct. But, we went with something that has the potential for a greater impact:

  • The owner purchased an indexed universal life policy on the employee’s life and overfunded it, giving the owner potential tax advantages down the road
  • The employee signed an agreement stating if he stays with the company until he is at least 65, he will get bonus distributions from the policy for 10 years – a nice supplement to his retirement income
  • Should something happen the employee before he retires, the company would receive the benefit to help with the cost of finding a new buyer
  • If the employee breaks his agreement and leaves for a competitor, the business owner can surrender the contract and keep the cash value.

This plan got resounding support from everyone – the business owner, his CPA and the employee – because it accomplished everything they needed. In fact, it was so effective, the owner decided to use the same strategy for three more people at his company.  

The lesson here? Make sure you’re not always going with run-of-the-mill solutions. Don’t assume the client will want basic coverage – make sure you understand exactly what they’re looking to accomplish. The result could surprise you.

 

About the Author

As an Ash Brokerage RVP, Mike Pompei works with industry-leading financial advisors, agents and centers of influence, assisting them with the creation of strategic solutions for their clients while enhancing their practices. With more than 25 years of experience in accounting, compliance, financial and relationship management, he has knowledge and skills to help in all areas of planning, including client consultation and point-of-sale support.

business owners key person

Protection for Single Parents: What you need to consider


Protection

Single parents have plenty to worry about, especially when it comes to finances. We asked two of our own to share their thoughts on how you can help these clients. 

 

Teresa Curreri, Sr. LTC Sales Consultant

Even though I’m a healthy 41-year-old with a good job, I have a lot of worries when it comes to finances. As a single parent raising a 13-year-old daughter and managing a single-income household, my biggest concerns are: 

  1. Cash Flow, Cash Flow, Cash Flow –

    It’s important to keep expenses as low as possible so we can be prepared for any emergency, like a car repair or plumbing issue. 
  2. Saving for the Future –

    It’s tough to balance saving for my daughter’s college education while also saving for my own retirement. 
  3. Extended Illness –

    If I get sick or hurt today, how will I pay my bills and care for my daughter? If I need long-term care in the future, who will take care of me and how will I cover the expenses? 
  4. Unexpected Death –

    If I die tomorrow, I want to be sure my daughter will be OK. No one wants to leave a legacy of medical bills or debt. 

 

As an insurance professional, I know women tend to worry about the future more than men. And, as expected, single mothers worry more than average women. 

Life, disability and long-term care insurance can help alleviate some of these worries, but the costs CANNOT be constricting to cash flow or savings – those things are still just as important! Keep that in mind when you’re talking to your clients who are single parents.

 

Gina Shaffer, Sr. Internal Wholesaler 

I have to agree with Teresa – cash flow, cash flow, cash flow! Money is always on the brain. We don’t live near my family or my son’s father, so I’ve protected us with two different approaches: 

  1. Plan for the worst – 

    It may sound morbid, but single parents especially need to make sure they have their ducks in a row. When I travel, my life insurance, will and trust papers are all in my bag. If anything happens to me, there’s a plan in place to protect my son. 
  2. Build a village – 

    If your clients are like me and don’t have family around, it can be especially difficult to ask for help. A few years ago, I was on disability and had to reach out to people I knew to help with my care. It wasn’t easy, but my son could only do so much to help me, and I didn’t want to burden him. 

 

As an advisor of a single parent, you should ask a lot of questions. The first: Have they updated the beneficiary on their life insurance? Chances are, it’s still their former spouse, and most people don’t realize they should NOT make their child the beneficiary. Instead, they could establish a trust and designate a trustee to ensure their child’s financial needs are met.

If something did happen to your client, are YOU prepared to talk to their children and other loved ones about the plans in place? Your role becomes even more important in this situation. Make sure you’re the partner they can depend on. 

 

About the Authors

Teresa Curreri is a senior LTC consultant partnering with agents to protect their clients and family from the uncertainty of tomorrow. She’s is a licensed life and health producer, and she’s been focusing on LTC for 15 years.  

Gina Shaffer is a Senior Internal Wholesaler with more than 30 years of experience in the life insurance industry. She takes an extreme amount of pride in creating an impact and partnering with agents, their staff and their clients.  

How to Overcome 5 Life Insurance Myths


Protection

Sometimes, helping my advisors sell life insurance is an uphill battle – with them and their clients. I know it’s not the sexy choice, and it’s not an exciting solution that’s going to help people make a million bucks. But, it does enable peace of mind, which can be more valuable in and of itself. 

With many years behind the scenes and out in the field, I’ve heard a lot of excuses. But, many of them just aren’t true. Advisors and clients are relying on myths, not facts, when considering life insurance.  

 

1) Employer-provided life insurance is enough

Ask your clients: Is the amount really enough to cover your needs? Can you keep your policy when you retire or change jobs? 

Many employers provide life insurance equal to one to two times the employee’s annual salary, and they may be able to purchase up to four to six times their salary. First of all, to replace a client’s income for their dependents, they typically need five to eight times their annual income – some experts even recommend 10 to 12 times. Second, their calculated “salary” doesn’t typically include commissions, bonuses, and second incomes. A needs analysis calculator can help you determine the amount of coverage your clients need. 

Even if they do have enough insurance through their job, you’re clients will likely lose their coverage when they leave. That’s they should only include their employer’s policy in covering their needs if they can take it with them at affordable rates. Otherwise, consider it a bonus. Plus, they may be able to get a better deal on their own, especially if they’re young and/or in above average health.

 

2) Only the breadwinner needs life insurance

Ask your clients: If your spouse works, how would you replace their income in your household budget? If your spouse stays at home, how would you replace their value in child care, cleaning and other household operations? What’s that add up to over several years? 

Are you kidding me?! Spouses who earn less or are non-working are extremely important, and their contribution to your household needs to be protected. If you haven’t already, you should read my colleague Sharlene Woerther’s blog for more information on why spouses need life insurance. 

This is yet another reason why it’s so important to do a needs analysis with your clients. Once it’s been put to paper, it’s amazing how many people see the value in their spouse’s contributions. Insuring a spouse also gives the remaining parent the opportunity to take time off work and help the family adjust to their loss.

 

3) Life insurance is really expensive

Ask your clients: What do you spend on soda and snacks in a month? Could you give that up to protect the ones you love? 

I use to tell clients that often times you can get life insurance for what amounts to a bag of chips and pop a day. Since then I’ve changed my diet, so I no longer buy those things anyway … but I wasn’t too far off with my estimates. You should run a quick quote for your clients and show them the real costs!

A study conducted by Life Happens and LIMRA found that 30 percent of Americans acknowledge their need for more life insurance, but only 10 percent planned to purchase it within the next year. The main reason given was cost, with 65 percent saying that it’s too expensive. However, 80 percent of them overestimated the cost. While the cost for a health 30-year-old would be about $160 a year, the average estimate was nearly twice as high. 

 

4) Only healthy people can get coverage

Ask your clients: Are your conditions under control? When was the last time you looked into coverage? 

Don’t worry if your clients aren’t able to run a marathon or keep up with a fitness video on TV – they don’t have to be perfectly fit to qualify. Yes, the healthiest people pay the lowest premiums, but the life insurance industry has come a long way I just a few years. Many who were deemed uninsurable in the past can now receive coverage. 

A lot of companies cover a range of health conditions, and some even specialize in high-risk cases. Clients can also purchase a policy that is not medically underwritten at all – just be aware that they tend to be more expensive and have lower coverage limits.

 

5) Young people don’t need life insurance

Ask your clients: Do you know of someone who died too young? Have you ever seen a Go Fund Me page to raise money for a person’s family after they’ve died? 

Social media is littered with examples of young families who’ve been impacted by the loss of a spouse or loved one under the age of 40. Accidents and illnesses can happen to anyone at any age. 

The bottom line? If your clients have anyone who depends on them financially, they should have live insurance. Help debunk the myths and make sure they’re covered. 

 

Learn More

 

About the Author

As a relationship manager at Ash Brokerage, Jason O’Barr is a teammate for advisors – identifying new sales opportunities, providing consultative and comprehensive insurance support services, and effectively helping advisors grow their businesses. With experience as a producer, a marketer and an internal wholesaler, he understands the process from the ground up.

life insurance myths needs analysis

3 Reasons LTC Planning is More Important for Women


Protection

Women are typically the caregivers of the family. We care for our own children and household, and maybe our parents and their household … Our own care typically comes last. It’s only natural then that women don’t think about long-term care (LTC) planning as much as we should. Because we can’t even fathom the idea of needing care for ourselves. 

But we MUST plan for the unthinkable because LTC is far more important for women than it is for men. Here are three reasons why: 

1. They’re more likely to need care themselves.

Women live longer than men and have higher rates of disability and chronic health problems. According to the American Association for LTC Insurance (AALTCI), roughly two-thirds of LTC insurance claims paid in 2011 were for women needing care.

2. They’re more likely to care for their spouses

Even if a woman can’t contemplate her own care, she might consider the need for her spouse. Ask her: “Can you imagine lifting your husband if he can’t lift himself? Do you think you’ll still be able to do that 10-20 years from now?” If the answer is no, then she needs to consider a plan for both of them.
 

3. Their daughters are most likely to be their caregivers.

The AALTCI reports approximately 75 percent of those providing home care are female, most often a daughter who spends 20 hours a week providing care to her mother. Do they want to give their daughters that burden? 


I witnessed the need firsthand when my own mom fell and broke her hip. I’m one of four children, and let me tell you, it was all hands on deck for a good two months. 

Someone needed to be with my mom when my dad was out of the house. We needed to shop, cook and clean for her. We took turns, but it was very hard taking care of two households, even though I was on rotation with three siblings. That whole time I thought, “Do I try to have more kids now or make a plan so my only child isn’t on her own in this?” I can’t imagine putting her through that alone. 

As a financial professional, you should be talking with ALL of your clients about LTC planning. But clearly, the conversation is far more important for women. Make sure you’re pointing out the risks their taking – for themselves and their loved ones – if they don’t have a plan. 

 

Learn More

American Association for Long-Term Care Insurance – Important Information for Women: http://www.aaltci.org/long-term-care-insurance/learning-center/for-women.php

 

About the Author

Teresa Curreri is a senior LTC consultant partnering with agents to protect their clients and family from the uncertainty of tomorrow. She’s is a licensed life and health producer, and she’s been focusing on LTC for 15 years.  

 

women long term care LTC

Ask an Underwriter: Why should I care about my client’s colonoscopy?


Protection

It may be an uncomfortable topic, but you may want to ask your clients if they’ve ever had a colonoscopy. Why? Colonoscopies are important in screening and preventative measure for colorectal cancer. 

In the United States, colorectal cancer is the third most commonly diagnosed cancer (excluding skin cancers) and the second leading cause of cancer death in men and women combined. According to the American Cancer Society, in 2016, 134,490 people will be diagnosed and 49,190 people will die from this disease.*

The good news? When it’s discovered early, colorectal cancer is highly treatable. In many cases, regular screening can prevent cancer by finding and removing polyps before they become cancer. And if cancer is already present, earlier detection means a better chance at a longer life.

 

Screening tests include: 

  • Colonoscopy – Done with either a scope or special imaging (X-rays), these tests look at the structure of the colon to find any abnormal areas. Polyps found during these tests can be removed before they become cancerous, so these tests are preferred for screening. The American Cancer Society recommends individuals be screened with a colonoscopy at age 50, but people at higher risk for colorectal cancer might need to start screening earlier.

  • Stool Cards – This is a less invasive screening methods which tests for occult blood in the stool. Positive test results typically lead to a colonoscopy to fully investigate.  

  • Blood Testing – In combination with the above tests, another screening can also be done by obtaining a carcinoembryonic antigen (CEA) value through blood testing. Normal CEA level is less than 2.5 ng/ml; when CEA is greater than 5ng/ml, further investigation is often warranted. 

As we see with many cancers, survival rates for colorectal cancer have been progressively improving since the mid-1980s as a direct result of early detection, routine screening and increased public awareness. Currently there are more than 1 million colorectal cancer survivors in the United States!*  

 

Underwriting Colorectal Cancers

For clients with colorectal cancers, insurability is largely dependent on the age at diagnosis, years since treatment, and other details. Those with early forms of cancer may be insurable with completion of successful treatment within one to two years, while those with more advanced stages could be postponed a full four years or be uninsurable. 

When evaluating someone with history of polyps and/or colon cancer, it’s important to know:

  • Results of colonoscopy performed as part of screening or a result of signs and symptoms
  • Results of all pathology reports to include staging
  • Results of colonoscopy performed as follow-up on any polyp(s) and/or cancer excision
  • Family history of colorectal cancer, age of diagnosis and relation to our client

With so many variables involved, we’ve created a. No matter the situation, we encourage you to ask questions and get all the facts. Have a specific question? Check out the resources below or drop me a line and we'll be happy to help.

 

Learn More

 

About the Author

Diane Fulk has been in the life insurance industry for more than 40 years, helping many families secure much needed life insurance coverage and peace of mind. She approaches each case, like each person, individually. She is certified in EKG interpretations, has passed all three of the Academy of Life Insurance Underwriting exams and many LOMA exams.

underwriting cancer