When it comes to the insurance industry, and specifically to how products are priced, men and women aren’t created equal.
Statistics prove that women live longer. So, when purchasing life insurance, they pay smaller premiums than men. Unfortunately, when it comes to disability insurance, that’s not the case.
All things being equal, a female will pay 30-50% more for a disability policy than her male counterpart. It’s because women are more likely to file a claim – not just for pregnancy, but for all types of claims.
The good news is that there is a solution. Multi-life. Most carriers offer some type of multi-life option, but I’m going to focus on Principal for this example. In addition to being one of the largest DI carriers in the market, they are also more flexible, and they offer unisex pricing options. To qualify as multi-life, they require policies to be placed on three or more people with a common employer. There is no requirement for the employer to contribute to the premium, although that’s certainly an option. In fact, the policies can be billed directly with no employer involvement.
Here we'll look at a 40-year-old female business owner in a white-collar occupation who lives in Indiana. For her policy, we’ll use a 90-day waiting period to age 65, and a $5,000 monthly benefit with residual. The premium for the policy, without any multi-life discounts, is $3,500 annually.
Now let’s assume that the client buys policies on two other employees. We just hit the magic number for making this a multi-life plan. Those two policies, after the discounts, can have annual premiums as low as $165 — which we can help you design. The client is paying a total of $330 per year for these two polices.
And now that the plan qualifies for multi-life, our client’s premium of $3,500 on her own policy is discounted to $2,300 annually. Her new premium, along with the $330 for her employees’ policies puts her total annual bill at $2,630. That’s an additional 25% savings, and her premium discount is locked in for the life of her policy — even if the other two policies are canceled later.
I believe that’s what we call a win-win.
Your Ash DI team can help you structure a multi-life plan for male and female owners. The discount on the females is much more significant — it lowers the female rate to be similar to that of a male — but don’t let that stop you from considering multi-life plans regardless of gender.
Take a minute to consider small businesses you work with. If multi-life is a viable solution to protect them and their employees, let us know. We’re here to help.
Editor’s Note: Because the need for regular insurance policy reviews never goes away, we decided to re-publish this post from 2015. When you’re done reading, be sure to water your plants – then go review your clients’ coverage.
It’s that time of year again! Houseplant Appreciation Day (celebrated Jan. 10) is finally upon us. It’s hard to believe it’s already been a year since we last took the time to celebrate the bond between man and shrub.
Houseplants offer many benefits: They filter our air, look great and can even reduce stress. As we all know, constant time, attention and care are all required to successfully tend to our green friends. Many of us are more than up to the task.
Why then, do we neglect to care for one of our clients’ most important financial instruments: their life insurance?
Most financial professionals agree that a client’s life insurance holding should be reviewed every couple of years, or after any major life event (marriage, birth of a child, new job, retirement, etc.) If your clients own any form of cash value life insurance, reviewing the coverage regularly is even more important. Unfortunately, this rarely happens.
Maybe it’s lack of insurance knowledge that keeps us from contacting our clients. Maybe we want to avoid the image of the “salesman.” Maybe we don’t even know who to ask for help. Whatever the reason, our Life Insurance Portfolio Analysis (LIPA) team can help you care for your clients’ policies and keep them from “wilting.”
The Ash LIPA team is a dedicated group of people who specialize in the review of in-force life insurance. With a signed authorization from the policy owner or trustee, and a couple other items, they can order information from the issuing insurance company to “stress test” the health and viability of any insurance policy.
After the in-force policy performance has been reviewed, the team can look at the marketplace today and determine if there are any potential improvements to be made. The life insurance industry is a fluid marketplace; products are constantly changing and evolving, just as your houseplants are constantly growing!
All joking aside, as financial professionals, life insurance review is critical for our clients. The consequences of a poorly managed policy can be devastating.
So, on this Houseplant Appreciation Day, as you take time to celebrate the indoor flora in your life (or not) at least remember this: Your clients’ policies are like your houseplants – they don’t require a lot of upkeep, but they do require regular attention if you want them to thrive.
As part of the LIPA team at Ash Brokerage, Scott Behrendsen’s goal is to not only ensure clients have the best possible protection, but to also present the planning strategies and concepts in a concise format that’s easy to understand. He’s been in the insurance industry for 10 years, working in annuities, broker-dealer operations, and health insurance before joining Ash Brokerage. He has an extensive background in life insurance case design and advanced strategies. He’s currently pursuing an MBA in marketing.
© 2018 Ash Brokerage LLC.