Tuesday, May 26, 2015

Facts of Life Insurance - Internal 1035 Exchanges

You don't ever change your mind, do you?  You don't ever move?  Your life is static, right?

When mortgage rates started dropping several years ago was it your bank that first reached out to you about refinancing?  Probably not.  Why would they?  You are content paying 6% on your loan.  Why would they call you up and offer to refinance your loan for 4%?  They just sliced off extra interest they would have earned and it impacts their bottom line.  Now if you call them and say another lending group is willing to do a refinance at 4% then they will jump at the chance to keep that loan with them.  Why be proactive when you don't have to be?

Insurance companies work in a similar way even establishing 10-20 year surrender terms if you want to cash in or exchange the cash value in your policy.  It sounds similar to a prepayment penalty for a bank loan doesn't it?  Even if there is a better product of insurance with lower fees or a more up to date life expectancy table your current insurance company isn't going to tell you about it. Policy Review  Maybe you find a better policy with another company after 10 years but you are hamstrung because you have a 20 year surrender period and taking a 25% hit on your cash value to move it into a better product still doesn't make financial sense.

You could try an internal 1035 exchange.  As an independent agent we can sift through the different types of permanent insurance policies within that company and see if you can do a penalty free 1035 exchange.  This way you don't get dinged with a surrender charge.

Here's an example:
A client bought a permanent policy in 2005.  He has accumulated $150,000 of cash value.   Being a smart consumer he wonders if this is still the best plan for him.  Is he still paying the right amount?  Is the amount of insurance still appropriate?  The short answer is we can improve his existing policy based on his cash value position but, his surrender value is $100,000.  Taking a $50,000 haircut is tough to justify.  After digging into the other products at that carrier, we realize he can move it into another product that is better suited for him now without losing his $50,000.

There can be cases based on the company and the type of products they offer where it still makes sense to switch to another carrier even if you have to leave some money on the table.  Getting objective feedback and comparing the proper inforce illustrations will show you if you should make that switch. 

Calling your insurance company or a captive agent is not the right tact.  They aren't out to get you but, they are going to tell you your policy is running just fine. Captive vs. Independent Agents  Many independent agents aren't aware of having this as an option.  They may lose money or earn less by doing this versus switching to another company but, doing the best thing for the client takes priority.

Enjoy our video....


Friday, May 22, 2015

The System is Broken - Can it be Fixed?

I'm impatient.  Not quite Frank Shirley impatient but, not far off.  Shirley, the old curmudgeon CEO from Christmas vacation asks his assistant to "Get me somebody. Anybody. And, get me somebody while I'm waiting."  http://www.hark.com/clips/rzccjdmxrs-and-get-me-somebody-while-im-waiting

I want things done in the quickest, most efficient, and best way possible.  Every time.  When I see areas that can be improved upon and aren't primarily from the "we've always done it this way" mindset it is like nails on a chalkboard.  To combat this we try to manage expectations.  Under promise and over deliver.

When a client applies for life insurance we tell them it may take 3 months depending on the need for medical records.  Why should it take so long?  Why does it take so long?  Should we just except it?  How can we make it better?

The biggest issue we see is the turnaround time for obtaining medical records.  Most of the time we have to use a third party copy service.  The copy service may only come to the doctor's office once or twice a week.  It might take 2 weeks for our request to cycle to the top of their list.  The copy service could sit on them for another week or wait for you to pay for them.  They might miss that doctor's office that week and push it out further.  That just took a month which fairly commonplace.

The Weather - We had several snow storms this past winter.  The facility closes for 2 days.  The copy service doesn't go to that doctor's office that week.  Maybe they are preparing for the storm a couple of days before and then playing catch up after.  We might lose two weeks right there.  What happened to this paperless office.  Do phones and internet access not work assuming you have power?  Apparently not.  Everything shuts down.
The Holidays - So, are you ready for Christmas?  You got all of your shopping done?  I hear the same questions every year.  Christmas has been my favorite holiday but, you are almost better off shutting down your practice from the week before Thanksgiving until January.  Everybody is getting ready for something which means that they can't focus on anything else for that 6 weeks.  As head of the party planning committee we can't be expected to work when the annual Christmas part is 3 weeks away.
Not Ordering the Records Upfront - An agent should know from the beginning if medical records need to be ordered.  In many cases the application gets to the underwriter who reviews the file and confirms medical records are needed.  You just lost another three weeks because they should have been ordered from the beginning and it can be cycling through the copy service while the application is working its way through the underwriting queue. 

We try to control as much of this process as we can.  We order the exam and the medical records through our own case manager and not rely on the insurance carrier.  It does help speed up the process and we have the ability to send them to another carrier if we aren't pleased with the offer.  This way we don't have to start over again.

Possible Solutions
1. We have shown up at the doctor's office ourselves with a HIPPA release form to obtain the records.  That may work if there isn't a centralized medical records reporting facility like some bigger institutions utilize.
2. We have offered to buy the staff lunch if they could release the records that day.
3. Keep calling the doctor's office and stress the importance and the time sensitive nature.
4. Work with the insurance carrier's wholesaler.  They are incentivized to get the case placed.  They will help push the case through and serve as your advocate.

How Long Should it Take?
We tell clients 3 months to set expectations.  Maybe we have just accepted it ourselves.  It shouldn't take nearly that long.  It really should take two and a half weeks.  There is no reason the client can't have his exam done, we obtain the medical records, and have the application in front of the underwriter with a verdict in two and a half weeks.

As a group we continue to push the status quo.  Why settle?  Why not strive to better.  I'm not just talking about agents but, everyone involved in the process.  The examiner, the copy service, the case manager, and the insurance company should all aim higher.  Think of how many more clients can be helped but continuing to push.  Be better.

Enjoy our video(part 1).....

and part 2....

and outtakes....


Monday, May 18, 2015

Excellence in Business - Jennifer Coleman

In previous posts, we have discussed examples of folks not producing quality work in our industry.  It could be in their lack of communication, their resistance to change, not properly reviewing a client's insurance policy, not bringing in experts in other fields to better assist with the client relationship etc.  Much of this was to bring to light the shortcomings we see so consumers can properly evaluate who they work with and if their advisors have any of those qualities.  From an advisor standpoint it was more of a call to action to assess the quality of their work and strive to continuously improve. 

We would also like to highlight professionals who we see strive to do their best work.  From objectively reviewing a client's current situation, expert communication, and going above and beyond from a customer service standpoint.  Jennifer Coleman exhibits those traits.  Jennifer is a real estate professional but, has drawn from her experience working as controller in the construction that brings a unique perspective.  With the building industry as a backdrop it enables her to view the house from the other side of the table.  This niche really comes into play with buyers who are looking to purchase new construction homes.

Jennifer also brings a balanced approach to her clients whether they are buying or selling a home.  She is numbers driven and may look at pricing and market conditions four different ways to help her clients determine pricing.  As she sifts through the mounds of information on properties and location, Jennifer can present the best options from an analytical perspective.  Jennifer also embraces the emotional aspects of the home buying and selling process and can manage both sides so the client can makes the best decision possible.

We also advocate her speed in communication.  Jennifer is quick and responsive with her smart phone never far away.  As she indicated in today’s market, homes are coming on and going off the market in a matter of 1-2 days in some circumstances so speed is critical.  With her active buyers she makes a point to check in at least once a week to see how they are doing without coming across as pushy.

As we are huge proponents of customer service, Jennifer keeps that mantra as a top priority.  Of course everybody says that, but how do you know if it’s true?  We took a gander at some of her unsolicited testimonials and were blown away.  All of her clients are her friends.  They may not have started that way when they met but, they are now.  Off the record, Jennifer told about meeting a client one Sunday night around 10pm in the rain to review some of the measurements of the house a client was considering purchasing.  In the end, she was able to get to the root of the problem and address the questions the client had about square footage.  Who does that?



Sunday, May 10, 2015

The Help (Case Managers).... Kind, Smart, and Important.

They is kind, they is smart, and they is important.  I do not mean to degrade their work in the least.  I happen to have who I consider to be the best case manager in the business.  I have been working with her for over 10 years and she makes my life better.

She is kind.  She knows how to handle my partners and me.  She knows that we are out in the field and need a little encouragement from time to time.  Some aspects of the insurance business can be frustrating.  It is nice to speak with someone who you can tell enjoys her job and is happy to speak with you when you need her help.  I have worked with case managers in the past who are just going through the motions. 

She is smart.  She knows who to speak with at the insurance companies.  She has been in place long enough that she knows who to contact at the carriers to get our business underwritten at the offer we need.  She also knows to ask the right questions so that she can help us the best way possible.  In other words, she often challenges my requests by saying things like "this carrier has an online application, would you rather use that?".. or .. "Maybe this case should go in as an informal because it looks like it could be table rated."  She doesn't see the client but she knows her way around her side of the insurance business.

She is important.  We, who see the client face to face need only to be thinking about those interactions.  Every moment wasted on paperwork, parameds, APS, etc. is a moment we could have spent with a client to improve his or her experience.  We should be able to pass off everything that isn't related to seeing clients to someone who we trust.  Most financial professionals could not say that they are completely confident that the case manager can handle that task with no oversight.  We at Brevity and Associates are completely confident.


Wednesday, May 6, 2015

Facts of Life Insurance - Quoting the Best Rate

We've all been in competitive situations.  Many times they can be stressful.  You want to put your best foot forward.  When interacting with a client it behooves everybody involved if you are open and realistic.

We often see agents quoting insurance rates to clients in a bait and switch type tactic.  They will quote the very best rate in a competitive situation to try and win the business.  They either quote the top rate in an effort to undercut another agent even when they know a client won't qualify for that or even worse they don't even ask the right questions to qualify the client.  Are You Asking The Right Questions

By asking the right questions and having a good knowledge base around underwriting you can give a client a more realistic view of what to expect.  The client will understand that most carriers have between 8 and 12 different health ratings and where they may slot in.  They might receive a preferred rating but, they could receive a level 4 or 5.  They aren't going to shop around for a cheaper quote if you are asking the right questions and finding the quote that makes sense.

Enjoy our video....



Monday, May 4, 2015

All of our LTC and disability are all handled by my husband's office

"All of our LTC and disability, are all handled by my husband's office."   Let me explain. 

I recently reached out to a new insurance agency.  New in a sense.  They have another P&C agency one town over and recently purchased this agency.   She is an independent agent and her husband is a captive agent.  I briefly described how we partner with other groups and thought a meeting to go into more depth would be appropriate.  I know we can help them.  They may not come to that conclusion and that's ok.  Companies have a certain way they do business and breaking away from that with different ideas can make your calves tighten up.  We aren't a good fit for everybody.  We try to work with people and companies that are like-minded, think with reason and logic, and always do their best work for their clients.  Developing and Maintaining Partnerships

I get at least one phone a day from a wholesaler asking for a meeting.  It can be a little much.  If nothing else I am going to learn something if I take the meeting either about market conditions or a innovative new strategy.

Someone in the same area calling to exchange ideas is a bad thing?  The first response was "I have to run it by my husband."  Great, bring him along.  We may be able to help him as well.  A follow up email included "All of our LTC and disability, are all handled by my husband's office."  No conflict there.  I'm sure all of your clients would be happy to know their local P&C independent agent is sending any of those needs to someone who is captive.  I've heard some dandies before but, that is a first. 


Friday, May 1, 2015

Facts of Life Insurance - Trust Fiduciaries

We run across trust fiduciaries quite often many of which are tasked with overseeing an irrevocable life insurance trust.  The overwhelming majority are neglecting their responsibilities when comes to thoroughly reviewing the health of these policies. Evaluating Trust Owned Life Insurance

Ex: 5mil policy that costs $100,000/yr
If you can get the same policy for $60,000/yr you are throwing away $40,000.  A fiduciary should be able to figure that out.  In fact it is their responsibility.

What if they are being underfunded?
We see far too often that these polices are blowing up or running out of steam.  If you aren't comfortable with doing this analysis beyond a simple inforce illustration then find someone who can do this for you. Policy Review

What if you are overspending?
Consider reallocating those premiums.  Maybe they should go back into the trust as a gift.

Is the amount of insurance appropriate?
What if the policy was set up based on a net worth of 5 million and now it is 10 million.  That should be addressed potentially before an attorney brings it up.