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I recently had a case where my prospect didn’t understand the importance of my needing details about his health.  You see, when you’re looking for the best rates on life insurance, it’s all about the details.  Some carriers will allow treatment for high cholesterol or high blood pressure and still give their best rating.  Some don’t.  Some have a maximum blood pressure of 135/80 for their best rating, while a few will allow up to 140/85.  Some allow the occasional cigar.  Some charge you tobacco ratings even if you admit to smoking 1 a month. 

In my recent case, a workers compensation insurance agent from New Jersey inquired on my insurance blog about life insurance.  We covered my Pre-App Plus questionnaire, where I ask about medications, medical conditions, surgeries & hospitalizations, height/weight, tobacco use, and a few other things.  I found the two issues in his case would be his blood pressure, which was recently taken at 149/104, and a total cholesterol of 229, (not incredibly high), but with a very low hdl of 27 (your good cholesterol), giving him a cholesterol/hdl ratio of 8.48… very high.   

So with that information I went to work for him, calling underwriters and getting their feedback.  As I expected, cholesterol and blood pressure were their primary concerns as well, especially his diastolic pressure of 104.  They asked me if I could get a hold of any past lab results to see if these numbers were consistent.  After all, we all know blood pressure readings can fluctuate if the cuff is too small, or if you’re nervous when it’s being taken.  So I emailed him asking if he had had any other lab work done in the past couple years, to which he responded:

Now, at this point, I know I have a problem.  I’ve already spent a couple hours on the phone with underwriters, and I really understand his medical history, but yet I can see he’s price shopping and he may have gone to some other agent and asked “what a $250,000 term policy would cost for a healthy 48 year old non smoker”, and the problem is they may have given him a preferred plus quote.  So if I quote him based on what I know, I know I’m going to be higher than the teaser quote he was given, even though he can’t get that rate.  So I emailed him a couple prices, to which he responds:

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In a controversial and no doubt, soon-to-be heavily debated press release, dated March 26^th, 2010, Prudential Life Insurance Company announced that effective May 1^st, 2010, it will no longer be offering its “Preferred Plus Non Tobacco” ratings to blonde women.  “Preferred” will now be the best rating blondes can qualify for when applying for Prudential’s term or permanent life insurance products. 

This is a huge blow to healthy blondes seeking affordable coverage.  How big a blow?  Take a 24 year old blonde female in great health, applying for a 20 year term policy for $500,000.  Until May 1^st, she could qualify for a Preferred Plus rate of $32 per month with Prudential.  But after May 1^st, the best offer she can get is Preferred, which costs $40 per month.  That’s a 25% increase!

Since I have a few blonde clients, I decided to call Prudential’s Underwriting department for an explanation.  I spoke with Chief Underwriter, Bob Jones.  Below is a transcript of our conversation.

Q:  Mr. Jones, why have excluded blondes from your best underwriting class?

A:  Well, Chris, it’s like this.  We’re in the risk management business.  We set our premiums based on the likelihood of having to pay out on a death claim.  Take our guaranteed UL policy… We typically only expect to pay out on 10% of all UL policies we have in force.  Recently, however, we noticed that this percentage has climbed up into the teens.  We spent a good amount of time and money researching why, and found that accidental deaths among blondes were largely to blame.

Q:  I see.  So you’re saying that blondes are riskier to insure?

A:  Certainly they are.  That’s not my opinion… that’s a fact, and they’re almost all accidental.  Let me give you an example.  Last year, nationwide there just over 1400 adult drowning deaths.  An incredible 600 of those were blonde women.  When you think of how blonde women only make up 15% of the adult population, that’s a staggering figure.  Seven of those blondes were Prudential clients, whose death benefits added up to over $3 Million.  And quite frankly, we’re tired of paying out death benefits for ridiculous deaths. 

We see death claims from blondes that we quite honestly don’t see from anyone else.  One blonde accidentally hung herself somehow trying to pump gas.  One of our younger deaths was a 16 year old who, for a school project, tried to make a piece of homemade gum.  In her garage, when going to dip it in citric acid, she mistook a jar of explosive next to it for the citric acid, and when she bit into it, blew off her entire lower jaw and most of her face.  My god, one of our drowning deaths was a blonde who drowned in her own kitchen sink.  So, you know, you see a few of these, and you just pay them out without thinking much about it, but when you see a long pattern of deaths that you just can’t attribute to anything but being blonde, you have to make a change.

Q:  But Mr. Jones, isn’t this discrimination?  How can you raise blondes’ premiums and not raise everyone’s premiums.

A:  The price increase is not due to some stereotype, but fact.  It’s no different than offering insurance to an obese adult at a higher premium than a preferred risk adult.  We know that our obese clients are more prone to suffer from strokes, heart disease, and diabetes, so we adjust our prices commensurately with the risk.  We know blonde women are more likely to die accidentally, so we have to raise their premiums too.  I agree this announcement may come with some criticism, but we have an obligation to our shareholders to be profitable here.

Q:  What would you say to a blonde who is just furious about this announcement?

A:  Well, there is a bright side.  We’re also announcing our BCP program this May, which stands for the Blonde Credit Program.  Essentially, if they qualify, we’ll give blondes credits that could get their premium back down to Preferred Plus rates.

Q:  How do you qualify for these “blonde credits”?

A:  We’re concerned for our blonde clients’ safety primarily, so we’ll be issuing credits if our blondes sign an promissory agreement to wear a bicycle helmet, elbow and knee pads whenever they go outdoors.  For our blondes with driver’s licenses, they can earn credits for posting our “Blonde Drivers Safety Guide” on their steering wheel, which reminds them to fasten their seatbelt, and that the left pedal is for stopping and right pedal is for going.  Other credits are available for passing an IQ test.  Now we don’t expect them to score highly, or even average for that matter, but we do need them to place in the lower 20 percentile, putting them roughly on par with Forrest Gump.

Q:  This is ridiculous, Mr. Jones.  You guys are going to get sued for this.

A:  If you’re offended, perhaps I haven’t made myself clear.  Allow me to end this conversation with an illustration.  Two blondes are hiking in a forest.  They come across a set of tracks.  The one blonde says, “I think these are deer tracks.”  The other argues, “No, I’m pretty sure they’re bear tracks.”  So they argue on, “Deer tracks.”  “Bear tracks!”  “Deer tracks!”  And they were still standing there arguing when the train came and hit them.  You see the moral is, we’re still willing to insure these dumb blondes; we just think they should have to pay a little higher premium than the average adult.

In conclusion, if you’re reading this and you’re a blonde, there is hope.  I am an independent agent skilled in obtaining the highest possible offer for blonde women.  Some companies are not so harsh with their ratings towards blondes, so be sure to shop around and use a knowledgeable agent like me to obtain the best policy at the lowest price.

The article above is satirical in nature, and intended to be an April Fools joke.  The use of any real person’s or company’s name is purely incidental.  Hey, let’s face it.  If you read this and thought any of this was real after the first line, you must be a blonde.

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My brother and I were recently talking about some of the stranger, funnier moments in our lives. He told a story about his dinner visit to an Italian restaurant in Kioto, Japan, where he asked the waiter for some parmesan cheese for his shrimp fettuccini alfredo. Apparently, all condiments had to be approved by the French Chef, who came out of the kitchen to discuss his request.

Picture my brother (short, fat, bald, much less attractive than me), sitting at this nice Italian Restaurant in the heart of Kioto, Japan with a French, snooty Chef (who somehow missed the fact he was in Japan working at an Italian Restaurant) who told my brother, “You cannot have parmesan cheese; cheese never goes on seafood.”  To which my brother, who is a bottom feeder, responded, “Is Ketchup out of the question then?”

And here’s my favorite…

His travels around Japan brought us to the subject of his airplane flight and another (yes, there are many) peculiar thing my brother does.  He always buys airplane flight life insurance. Basically, how it works, for those of you who already know this is not a good investment, is that you pay 25 bucks to buy $1,000,000 worth of coverage so that if your flight (not future flights, just this one flight) were to crash and you die, your beneficiaries would receive $1 Million dollars.

My brother knows it is a terrible investment.  I read once that you could fly for 26,000 years straight and the chances are you still would not crash, and even if you did, you would most likely survive. So to insure he does not die, on each flight he buys the flight life insurance.  He calls it playing the odds; I call it stupid.  

A 33 year old male in good health like my brother could purchase a $1 Million dollar policy for just $20.92 per month with level premiums for 10 years, rather than just having coverage for a few hours.  And with a regular 10 year term policy, he could die any way he wants (excluding suicide)(including in a plane crash), and his family would still get the 1 million.  For my hick brother in Alabama, that would include being run over by a John Deere Gator, being suffocated by one of his boa constrictor snakes, or accidentally shooting himself.

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I typically keep the contents of my insurance blog focussed on insurance related material only, but once in a while, I’ll post an article about something else, but only if it’s near and dear to my heart.  Today, I’m pitching Volunteer San Diego, and asking those of you who live in the area to get involved.

I’ve been working with Volunteer San Diego for two years.  Working full time in life insurance and as a husband and father, I don’t have much time to donate.  That’s why I like working with Volunteer San Diego.  Their service projects are numerous and flexible as well.  Their projects seem to fit into any schedule and accomodate whatever area of service you are passionate about.

The particular project that suits my schedule and passion for service is Casino Night in El Cajon at Country Hills Healthcare.  I can’t get enough of blackjack and poker, so if I can bring a smile to a senior’s face at the same time as playing with chips and money, I know I’ve found my calling.  Blackjack and bingo are our usual games of choice, but I tend to hang out at the blackjack table. 

Dealing is my specialty.  I’m always surprised by the high quality of play there.  Former “high rollers” in the room perhaps?  Most of the players play “by the book” as they say, betting by the odds when it comes to hitting or staying.  It’s common after an hour filled with doubling down, splitting, and getting paid on blackjacks, for them to take all the dealer’s money. 

Sometimes they’re a bit cut-throat, which is just hilarious.  They’re only playing for nickels!  You might think some of them were playing with $25 chips instead as competitive as they get.  Just watch out if you’re dealing there, because if you miscount their cards, they’ll catch on, and let you know about your mistake.  I’m a financial planner, so it’s pretty embarassing (and hilarious) when I add up their cards incorrectly.

I personally get a great deal of satisfaction every time I go.  The seniors love it,

Attention Life Settlement Providers, Funders, Brokers, and Potential Sellers: Do you have a prospective life settlement case but it’s been squashed due to the tax bill the settlement would create? Does this scenario sound familiar?

Client: They’re gonna buy my life insurance policy for $1 Million dollars? Fantastic! And I don’t have to pay premiums anymore? Where do I sign? Oh, wait… This sale is going to generate a $350,000 tax bill? I just can’t justify that. No thanks.

Here’s an exit strategy that can save this case. The Charitable Bargain Installment Sale. It’s traditionally been a strategy used for highly appreciated assets such as stocks and real estate, but it’s become an important tool for life settlement cases in the past few years due to the incredible tax problem they create.

The plan involves two strategies: An installment sale and a bargain sale.

Installment Sale — Rather than selling the policy and taking a lump sum, the seller, or settlor, takes an income stream (typically over 10 years). In the case above, a 75 year old client would receive approximately $130,000 annually for 10 years ($1.3 million cumulative).

The Bargain Sale – The settlor, or seller, exchanges the lump sum value of his policy for an installment payment from a 501(c)(3) not-for-profit foundation. Just before the sale, the seller transfers ownership of the policy to a foundation/charity. The foundation then sells the policy, but keeps a small percentage (the charitable bargain amount) and guarantees payments to the original seller pursuant to the installment agreeement.

Tax Benefits — In the case above we had an estimated $350,000 tax problem. However, if income is taken over 10 years, the tax is effectively stretched out over the term of the installment payments. So $35,000 over 10 years rather than one tax bill of $350,000. But the strategy does more than defer the taxable gain.

The bargain sale launches a huge tax deduction, typically 3-4 times the amount gifted to the foundation, wiping out (or at least taking a big chunk out of) your the seller’s $35,000 tax bill every year. The deduction can be stretched out over as many as 6 years.

There are additional tax and asset protection benefits to this strategy as well. For more information or for help with a case you’re working on, give me a call, Chris Huntley, at (619)564-4873, or email me at ChrisH@huntleywealth.com. I am a licensed life agent and IAR in San Diego, and a certified Charitable Bargain Installment Sale Advisor.

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I recently had a 48 year old woman call me asking about how her atypical nevus would affect getting life insurance at an affordable rate.  Approximately 3 years ago, my client had an atypical nevus removed from her arm.  It was biopsied and found to be benign, and was approximately 2-3 mm in diameter.  No treatment or reoccurrence since.  This was the only nevus she’s ever had and has no other suspicious moles on her body, nor has she ever had any disorder of the skin, other than acne.   A nevus is not considered cancerous, but life insurance underwriters take them seriously because people who get them are at higher risk for getting skin cancers like melanoma and squamous or basal cell carcinoma.

So I went to work and called over a dozen underwriters with the details of my case.  Female 48, 2-3 mm, 3 years ago, and what I found were varying responses.  Some underwriters viewed my case similarly to a melanoma case, and wouldn’t offer better than standard.  Some said they’d go as high as preferred, and a couple quoted me preferred plus.  From the two carriers that quoted preferred plus, she did not quite fit into one’s weight maximum, so we went with the other. 

A few important factors the underwriters were interested in were:

Number of Nevuses:  Was it just one?  Some said they would allow one, and some said two and still give a preferred offer.  Does the proposed insured have any other moles?

Location of Nevus:  As with melanoma and other skin cancer, some body parts, such as your arms and legs and trunk are lower risk than getting cancer or a nevus on your hand, foot, head, or neck.

Time since Removal:  This may be obvious, but the longer it’s been since the nevus was excised without reoccurence, the more favorable the offer.

This case demonstrates the value of using an independent life insurance agent.  Had my client gone to her State Farm or Farmers agent, she most likely would have gotten standard or worse.  As with any medical condition, you’re best chance for preferred or better rates are to shop the case out amongst all the carriers to see who will treat your condition the most leniently.  For quotes on life insurance with an atypical nevus, call me at 619-564-4873 or use the quoting form on the right.

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For people who live with bipolar disorder and need life insurance, there is hope, even if you’ve been turned down previously.  The important thing if you’re looking for affordable life quotes with bipolar or depression is to use an experienced independent agent who will take a thorough questionnaire from you and try to gain an extensive understanding of your particular condition.  Then the agent’s job is find you the company that will give you the life insurance you need at the most affordable premium.

I have extensive experience dealing with anxiety and depression, and from a life insurance underwriter’s point of view, bipolar disorder is not too different.  As an underwriter from Genworth put it, “The way I see mental disorders is that if they don’t impede a person from living a normal life, they don’t get rated.”  So, essentially, whether it’s anxiety or bipolar disorder, if your condition is under control, meaning you go to work, and go out with your friends for dinner, and live a “normal” social life, you can qualify for life insurance.

Now, most of my cases have been on the mild side for anxiety/depression, with my clients taking medications like Lexapro, Zyprexa, Prozac, and Paxil, some of which are used to treat bipolar disorder.  For some reason, I have lots of clients on Lexapro, and none of them have been turned down because of it.  In most cases, you won’t be able to get preferred best ratings if you’re on a medication for a mental disorder, but “preferred” is possible, and standard is very doable.  With bipolar disorder, it will depend on the medication and the severity, but I have heard of bipolars being approved at standard or better, and work with a general agency with extensive experience in achieving these offers.

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Let’s say you have a 10 year level term life insurance policy.  What happens after the 10 years is up?  Do you lose your life insurance coverage?  Most people assume that if they have a “10 year term policy” or “20 year term policy” that their coverage ends at the end of the term.  In most cases, this is not true.

Most term life insurance policies actually cover you to age 95.  When you buy a life insurance policy, let’s say at age 40, you could buy an annual renewable policy, which goes up every year since you’re older and for insurance purposes, are just a little riskier to insure.  So annual renewable life insurance policies are available, but they’re not very popular since the premiums go up every year.  Your premiums for a $1,000,000 male non-smoker might be $250 for the first year.  Then $265 in year 2, $275 in year 3, and so on, until 10 years later when you’ll pay about $450 for the coverage.  This is an example of annual renewable life insurance.

Since most people would rather plan their budget around fixed expenses, many insurance carriers offer level term life insurance policies.  In essence, they’ll still cover you until age 95, but for a fixed term, say 10 years, or 15, 20, or 30 years, your premium (payment) is fixed.  In the example above for 10 year term life insurance, they would add up the premium for each of the first 10 years and divide it by 10, and that would be your premium for the first 10 years.  So essentially, 10 year level term life insurance just charges you an average premium for your first 10 years you’ll be covered.  Then in years 11 and up, or in the case above, from ages 50 to 95, it reverts to annual renewable insurance coverage.

If you can understand that, then you’ll see the importance of locking in as long of a level term as you think you might possibly need coverage, because once the level term is up, your premiums will skyrocket, and eventually become unaffordable.

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There are some obvious preparations before eating at the Heart Attack Grill - You know…there are the no brainers like fasting for a week, wearing loose clothing, and making sure your insurance card is in your wallet.  But also be sure to complete these 10 To-Do Items before pounding down your next quadruple bypass burger.   

1.      Give your mother a dozen roses and tell her you love her.  Farewells to other friends and family would also be appropriate.

2.      Remember to take your blood pressure and/or cholesterol medication.  You won’t stand a chance without your Zocor!

3.      Bring a yak bucket and keep in your car for the ride home.  You never know.

4.      Get a complete physical done by your doctor along with labwork so your good health is well documented, which will give your family good grounds to sue when you stroke out.

5.      Make love on a train.  Smoke a cigar or cigarette after.  No sense in worrying about getting addicted.

6.      Write your will.  A trust would be even better because a will doesn’t avoid probate.

7.      Wear new pairs of socks and underwear.  You’ll impress the heck out of the nurses at the hospital.

8.      Skydive.  What have you got to lose?

9.      Make peace with God. (And don’t blow it by staring at the hot nurses at the Grill)

10.  Purchase a big life insurance policy.  I recommend at least a $1 Million death benefit to help your wife with paying the mortgage, raising your children and putting them through college, and to replace your income.  You can get a quote in the box to the right.

We love you Heart Attack Grill!  Just kidding about #4.  Not kidding about the rest.

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