Imagine you’re me. And you have to stand up in front of a room of financial advisors and talk about the tax efficiencies of a certain investment vehicle. At first, everyone is alert and attentive. No one likes taxes, so everyone is ready to learn.
But then? I say the magic word: insurance. People slump in their chairs, check their phones … some even roll their eyes. Maybe just reading this, you’ve already lost some of your excitement. The objections are already flying through your mind:
Put your prejudices aside. What if, instead of mentioning the word insurance, I asked a simple question:
Is there a better way to own the S&P 500?
Would all those planners in the room want to listen? You bet. Do I have your attention again? Good.
No matter your prior experience with insurance planning, I’m willing to bet you’ve never heard the cash value life insurance story the way I tell it. I want you – and your clients – to understand the largely-unused and underestimated impact of IRC 7702, which is the tax code that makes life insurance an incredibly efficient vehicle for saving.
Tim Ash is known as a visionary in the financial services community. He is an industry leader who envisions a future where insurance is easy, affordable and an essential part of a sound financial plan. As CEO of Ash Brokerage, Tim has fostered an environment of success with team-focused empowerment and client-centered service. He has built a culture where people not only believe in what they do, but more importantly, they understand the reason behind their efforts.
I recently received a difficult call from a family friend. His brother Matt, age 44, had unexpectedly passed away, leaving behind a wife and two teenage children. He asked if I could assist with a review of Matt’s life insurance policy.
I met with him immediately and, upon seeing the policy, a slight bit of nervousness came over me because it was clearly a term policy. I took a look at the duration, which was 10 years … thankfully, the policy had been issued nine years prior and was in good standing as all premiums had been paid. My nervousness eased. I was able to tell my friend that Matt’s family will soon receive a tax-free benefit of $500,000.
This event really had me thinking about term insurance – its purpose and place in the market. If Matt had passed away just one year later, his policy may not have been there for his family. And, since Matt had purchased his policy from a college buddy who was no longer selling insurance, chances are he wouldn’t have thought of purchasing another policy, leaving a gap in his family’s financial future.
As it was, a terrible event was eased, just a bit, by immediate financial security. That’s what insurance does. That’s my love relationship.
I own term insurance. I have sold term insurance. Term insurance works, as is shown in the above situation. However, selling a term insurance policy and not following up with it comes with as much peril as selling a security and not paying attention to the market. By its very nature, term insurance is a temporary fix, a Band-Aid that will swoop in and save the day in the darkest moments of people’s lives. But it does have a shelf life that must be paid attention to.
Many reps say they will sell term and then convert the policy to permanent (usually universal life) when the client gets older. While a good plan, this leaves all of the control up to the insurance company. When your client needs to convert the policy, possibly due to declining health, will they still be able to?
Many insurance companies have limited the conversion period of their term products. If they can convert, what products are available to convert to? Many insurance companies keep just a single product available for conversions, many times this product is not something that your client would have considered purchasing if not forced to. Is that in their best interest? That is my hate relationship.
Today’s financial advisors don’t leave much to chance. They manage, they balance, they review and they make sure that their clients’ retirement income is secure. Yet many of these same advisors still pull out the term spreadsheet and sell a term product by price. They don’t have an insurance value discussion with their clients. How are their clients saving for college? How are they offsetting down market years in retirement? How are they accounting for the cost of medical care? Permanent life insurance can help with all of these things, and in a very tax efficient manner.
I can understand selling term insurance for a young family who doesn’t have two nickels to rub together, or for business partners who have a specific time frame they wish to cover. But for most other clients, AND for almost all clients who use a financial advisor, life insurance should be sold as a value proposition, incorporated into and complementing all financial plans.
Remove the love and hate, the yin and yang, the ups and downs that term insurance brings. Have a value added permanent insurance discussion with all of your clients and make sure they are covered whenever they may need it.
Each year, millions of people face the reality of living with a mental health disorder. In fact, each year one in five adults in the United States experiences a mental health issue.1
Because May is Mental Health Month, we would like you to more clearly understand some of the conditions and what you can expect in underwriting. There are more than 200 classified forms of mental illness,2 but on life insurance applications, we most commonly see anxiety and depression.
Anxiety – Anxiety is the body’s reaction to stressful, dangerous or unfamiliar situations. In people with anxiety disorders, this feeling does not go away and gets worse over time. Generalized anxiety disorder, panic disorder and social anxiety disorder fall into this category.
Depression – Depressive disorders can occur in combination with any of the anxiety disorders and include major depression, persistent depressive disorder and bipolar disorder. Major depression is often disabling and can include symptoms of hopelessness, fatigue, insomnia, restlessness and thoughts of suicide. With bipolar disorder, once called manic-depressive disorder, we see a large spectrum of moods from severe depression to mania, including hallucinations
PTSD – Years of war in Afghanistan and Iraq have increased the diagnosis of Post-Traumatic Stress Disorder (PTSD) in military personal. But PTSD is also found among survivors of natural disasters, victims of crime, and many others who have experienced traumatic events. Symptoms include flashbacks, angry outbursts, insomnia and guilt. Some people recover within six months, while with others, the condition becomes chronic.
Losing a loved one, getting fired, going through a divorce, and other difficult circumstances can lead a person to feel sad, lonely or anxious. We see these episodes as “situational” and understand they are normal reactions to life’s stressors. The concern in underwriting is people who experience these feelings daily, for no apparent reason, making it difficult to carry on with normal activities.
In addition to the conditions above, we see many other mental health conditions, including attention deficit hyperactivity disorder (ADHD), eating disorders, obsessive-compulsive disorder (OCD), and postpartum depression, but the key to successful underwriting of ANY mental condition is control and compliance. Medication and psychotherapy are extremely effective in the management of symptoms, so underwriters look for stability and long-term prognosis. We will want make sure your client sees a physician on a regular basis and takes their medication as prescribed.
Our Mood and Anxiety Disorder Questionnaire will help you get to the heart of the matter. It is straightforward, yet kind, asking questions in a way that should be comfortable for you and your client. Naturally, if you have a specific scenario you would like to discuss, please reach out to me at Laura.Dagle@ashbrokrage.com.
1National Alliance on Mental Illness: https://www.nami.org/Learn-More/Mental-Health-Conditions
2National Institute of Mental Health: https://www.nimh.nih.gov/index.shtml
Anxiety and Depression Association of America: https://www.adaa.org/understanding-anxiety
Ash Brokerage comprehensive questionnaire for Mood and Anxiety Disorders: http://192.168.97.44/docs/forms/impairment/Mood_Anxiety.pdf
Laura Dagle has been in the insurance industry for more 35 years, during which time she has been both a producer and an underwriter. As someone who has seen the business from “both sides,” she is keenly aware of your desire to have the smoothest process, easiest underwriting and best possible outcome. She has worked closely with the behavioral and mental health care system and understands the nuances of each condition.
Sleep apnea is one of the most common, and often underdiagnosed, impairments we see in underwriting. It affects up to 18 million people in the United States alone.1 It can be defined as a disorder that causes someone to have one or more pauses in breathing or shallow breaths while sleeping, lasting anywhere from a few seconds to a few minutes. Typically, normal breathing starts again, sometimes with a loud snort or choking sound. These breaks in the sleep cycle can leave someone tired throughout the day, otherwise known as excessive daytime sleepiness, or EDS.
The most common type of sleep apnea is obstructive sleep apnea, or OSA. It happens when the tongue, tonsils or other tissues in the back of throat block the airway, causing someone to have shallow or paused breathing. Central sleep apnea is less common and happens when the brain doesn’t always signal the body to breathe when it should. Obstructive sleep apnea is most commonly seen in individuals who are overweight, but keep in mind that it can affect anyone.
Sleep apnea can have many negative long-term effects on health and mortality risk, including:
The severity of sleep apnea can be determined by overnight polysomnography (also knowns as PSG, or a sleep study). This test determines an individual’s apnea-hypopnea index (AHI), the number of apneas they have per hour, and it also documents their blood oxygen levels. Treatment is recommended based on the study’s findings. And, the success of treatment is normally documented by a follow-up sleep study.
Basic treatment includes weight loss, the avoidance of stimulants (such as alcohol) before bed, and adjustment of sleep position. A CPAP (continuous positive airway pressure) or BiPAP (bilevel positive airway pressure) machine is considered the “gold standard” of sleep apnea treatment. It prevents the collapse of the airway by pumping airflow during inhalation by face mask or nose cushions. Successful treatment includes regular, nightly use of the machine; however, some people cannot tolerate the device, mask and associated noise.
In recent years, popular alternative treatments have included:
A life insurance offer for clients with OSA is determined by the severity of the disease, measured by AHI and oxygen levels during a sleep study. Favorable client conditions include mild disease (low AHI and minimal low oxygen levels or hypoxia), consistent use of CPAP/BiPAP (or possible alternative treatment), controlled blood pressure, no co-existing heart or lung disease and no risky motor vehicle events.
Favorable cases can sometimes be considered unrated. For example, a client with mild sleep apnea who is compliant with CPAP/BiPAP, and has normal blood pressure with no associated impairments would not be rated, and they may be eligible for all preferred classifications with some carriers. Other cases may range anywhere from standard and up, depending on the severity of sleep apnea and compliance with treatment.
The Ash Brokerage underwriting team leverages our experience, carrier relationships and resources to identify viable solutions based on your client’s individual circumstances and insurance needs. For your next sleep apnea case, use our helpful questionnaire. And, contact us so we can suggest ways to help you obtain the most favorable offers. Let us awaken the possibilities!
Lisa Oleski has been brokerage underwriting for the past 20 years. She is passionate about treating each case she touches as an opportunity to exemplify the Ash difference, with the ultimate outcome of finding the most favorable solutions for advisors and their clients.
1National Sleep Foundation, Sleep Apnea: http://www.sleepeducation.org/essentials-in-sleep/sleep-apnea
NT-proBNP is a fairly new blood test, for both clinical medicine and insurance risk assessment.
B-type natriuretic peptide (BNP) and N-terminal pro-brain natriuretic peptide (NT-proBNP) are hormones produced by your heart to regulate blood pressure and fluid balance. Normally, circulating BNP and NT-proBNP levels are quite low – they increase when pressure in your heart changes due to increased blood volume, fluid retention or ischemia.
Due to its predictive value in assessing the strain to the heart, NT-proBNP is considered by American College of Cardiology to be the benchmark against other biomarkers for heart failure.1 Results may help determine if you have heart failure versus other causes of dyspnea (difficulty breathing or shortness of breath). Increased levels in patients with difficulty breathing show an increase in likelihood of heart failure.
Elevated NT-proBNP can also be found in other conditions, including acute lung injury, acute myocardial infarct, atrial fibrillation, cardiac amyloidosis, COPD, chronic renal failure, cirrhosis, hypertension, pulmonary hypertension, pulmonary embolism with associated right ventricular dysfunction and subarachnoid hemorrhage.
Normal NT-proBNP levels (based on Cleveland Clinic’s Reference Range2):
If you have heart failure, the following NT-proBNP levels could mean your heart function is unstable:
ProBNP levels are higher in women, older individuals and people with renal insufficiency. Some medications, such as ACE inhibitors, beta-blockers, spironolactone and diuretics have been known to decrease levels.
NT-proBNP has been selected over BNP as the superior test for insurance companies, as it is easier for parameds to correctly administer the blood draw. This simple blood test is run by carriers for certain ages and amounts, often in lieu of resting EKGs, and has helped eliminate the need for stress EKG testing at larger face amounts.
In their risk assessment, insurance carriers use NT-proBNP along with many other cardiac risk factors (hypertension, hyperlipidemia, family history of coronary artery disease in first-degree relative, tobacco use and diabetes) and any known history of vascular disease, atrial fibrillation, congestive heart failure and/or renal insufficiency.
Elevated NT-proBNP levels could prompt an underwriter to ask for additional cardiac work-up, such as a repeat blood test, stress test, echocardiogram and/or cardiology consult.
Ash Brokerage is here to assist you! To simplify your fact-finding process, use our NT-proBNP Client Questionnaire and reach out to us for help. We leverage our experience, carrier relationships and resources to identify viable solutions based on your client’s individual circumstances and insurance needs.
1Journal of the American College of Cardiology, “NT-proBNP: The Gold Standard Biomarker in Heart Failure,” December 2016: http://www.onlinejacc.org/content/68/22/2437
2Cleveland Clinic, B-type Natriuretic Peptide (BNP) Blood Test: http://my.clevelandclinic.org/health/articles/b-type-natriuretic-peptide-bnp-bloodtest
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.
© 2018 Ash Brokerage LLC.