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BabyExamplePictureCalling all Parents and Grandparents!!

Sometimes life insurance seems like a losing proposition. You pay and pay premiums and can’t envision the time when you will need it or even worse, when your family gets the money upon your death.  While traditional products were designed for death benefits protection, today’s products are much more flexible, allowing people to use them for cash value accumulation, disability protection, long term care protection, and should none of those needs become a reality…death benefit protection.

The term we insurance people use to describe these flexible uses of a life insurance policy is  “living benefits” – meaning values created by a life insurance policy can be used during the insured’s life, not just upon their death..  These living benefits become more and more lucrative the earlier you start.

Starting early in a child’s life can allow you to provide benefits to them throughout their life. This can be through cash distributions for college funding or acceleration of death benefit for disability and long term care needs..  We’ve been structuring policies that grow to as much as $1 million of available benefit when the child reaches their 80s (i.e. when they’re most likely to need that coverage for long term care needs) for as little as $25 a month. We don’t start at a million because that would be silly, but we design the policy so it’s gets there when the time is right.

These hybrid products can allow you to use one contract for multiple needs. Cash accumulated inside the policy can be withdrawn on a tax free basis, provided the actual policy stays in force. Much more flexible than a 529 plan, these withdrawals can be used for college funding, starting a business, a home purchase and basically anything the child may need in the future. The living benefit riders allow the insured to draw down on the coverage amount for disability or long term care funding. It’s important that I note here that different carriers have different protections associated with these living benefit riders, so understanding what any given carrier is offering is essential.

These policies can be taken out up to age 90, but like we said, they perform beautifully when started in the toddler years. It’s really not about protecting those years as much as it is providing the long term living benefits we’ve discussed. Many parents and grandparents will also take out like coverage for themselves in order to protect their children and grandchildren from the financial exposure of their own long term care needs later in life. If you’ve shopped for long term care coverage you know it’s a use it or lose it proposition. When you use a hybrid life insurance product with living benefits it’s not. You use the benefit during your lifetime or it passes to your beneficiaries when you’re no longer here.

If you’d like to discuss your personal situation we’d love to hear from you. And PS…these types of policies don’t pull up on our quoting system, so don’t let that scare you.

 




 

InsureMomTooLogo

FOR IMMEDIATE RELEASE: October 30, 2014

Alison Shiry
The Insurist
310-849-4351
alison@theinsurist.com

THE INSURIST LAUNCHES INSUREMOMTOO.COM
#insuremomtoo is focused on the insurance needs of Moms

Los Angeles, CA: Today The Insurist (http://theinsurist.com) launches a new brand solely focused on the life insurance needs of Moms.

Having been in the insurance business for fifteen years, Founder Mindy Lamont noticed a gap in education around the need to insure the lives of Moms and has set out to solve that issue with an educational program she’s branded as #insuremomtoo (http://insuremomtoo.com).

“Time and time again, when I’m in meetings with growing families I hear couples express a misunderstanding of why you would buy life insurance for wives and mothers. I call it a social hangover, but today the needs of children are highly dependent on the resources a Mom provides inside or outside of the home (or both!) and these resources are crucial to the financial success of the family. Not insuring Mom can have devastating effects on the future of her children if she were to pass away. Single Moms almost always understand the need. In all cases, we can typically insure Mom’s value to the family for less than anyone expects.”

A survey conducted by LIMRA found that 83% of people believe life insurance is too expensive with a majority of those believing a $250,000 20 year policy would cost $400 per year when in fact it would be closer to $150 per year. Another point made clear by recent industry surveys is Moms are one of the most underinsured demographics in the nation with less than 30% owning adequate life insurance coverage.

In the next six months #insuremomtoo will launch via events throughout Southern California, starting with Club MomMe’s Fall Fest on November 9th. Following that, influential Mommy bloggers will be invited to educational lunch meetings and in the first quarter of 2015 The Insurist will start inviting Moms to fun and educational events at blow dry salons, lunches and brunches. Those interested in being on these invite lists can send their contact information to insuremomtoo@theinsurist.com.

About The Insurist: The Insurist is a unique insurance agency that combines old world agency management strategies with new world technologies. Founded in 2012 by Mindy Lamont after years in the industry, the company is rapidly expanding to serve the needs of growing families and growing companies throughout America.

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Back in November (before all the holiday madness!), I was graciously invited to join Toni Patillo and Karla Dennis on the Call Toni Radio Show. Watch the video for a summary of our conversation…and tune in on Saturdays from 3-4pm!

We love it when a good infographic comes along. This time it’s courtesy of the Life Foundation, and they bring up a thought provoking question: Do you have enough life insurance?

LIFE_life_insurance_infographic_letter

 

 

 

 

 

TermVWholeLifeBWI sigh just typing those words. Several times.

People get all sorts of riled up on this topic. Cue the likes of Suze Orman and Dave Ramsey. It’s like the Vegan argument. Full of passion, idealism, emotion, and half truths. And no, I’m not calling Vegans liars. My diet comes close, without all the emotion. Same with my views on term vs. whole life insurance.

I believe they’re both good. Depends on the client. Put into the wrong hands, a whole life policy can be like kryptonite for your finances. In the right hands, and much later down the road, a well designed whole life policy can be a diamond in the rough, just waiting to be harvested. This is where the confusion lies. The pundits like to portray this as an apples to apples comparison. It’s not. At all.

Let’s start with defining term coverage. Term is the most basic form of life insurance. At the time of underwriting your risk profile determines your premium. That premium is guaranteed for a certain number of years. 1, 5, 10, 15, 20, etc…usually in five year increments. At the end of the initial term, the premiums typically skyrocket. Why? Because term life insurance isn’t designed to go on forever.

Often times this increase in premium is described as a scam or another example of the insurance industry trying to take your money. It’s really not. It’s just that these products are not intended to go beyond their initial term. That is all. You might think someone who was uninsurable at the end of a term policy might have to continue and pay these enormous premiums. Likely not. Why? Because of something called a conversion privilege…one of the most important concepts when it comes to buying term life insurance.

What’s a conversion privilege you ask? The majority of term policies provide the ability to convert to another, usually permanent, product with no additional evidence of insurance. Huge, right? That means if during the duration of your term policy you decide you want life insurance for life you can get the same amount of coverage in a permanent product guaranteed. The devil’s in the fine print though, because some policies limit the number of years you can take advantage of this, so make sure you know what you’re getting into.

So the summary on term life: simple, affordable coverage that is intended to cover a temporary risk for a defined number of years.

Whole life isn’t so easy to explain. This is often part of the problem. Hard to explain and harder to understand if you’re not eating, drinking, and breathing life insurance every day. This is what leads to the product being SOLD instead of understood.

Whole life is best used as a savings product, not strictly for death benefit protection. And it’s a LONG TERM savings product when used this way. While there are many different uses for whole life products, I’m going to stick to its application as a safe money savings tool.

Treating it as an apples to apples comparison with term life products, the premium numbers immediately point out we’ve got big differences. For the healthiest 35 year old man, a $1 million 20 year term policy will run something in the neighborhood of $40 per month for 20 years. For the same guy, a $1 million dollar whole life policy will cost $820 per month through age 65. Say what?!? No that’s not a typo. $40 a month vs. $820 a month. Who in their right mind would pay $820 for something they can get for $40?

No one. Because it’s not the same policy.

The difference in this example is what happens INSIDE the policy and what you can do with it. Some call it a “living” benefit. If we look at the whole life policy at the end of twenty years (when the term policy expires), the whole life policy has a minimum guaranteed cash value of $231,360, where as the term policy has no cash value built up. If the client pays premium to age 65 and uses the cash value to supplement his retirement income, he has the potential of adding over $27,000 to his annual income from age 65 to 95. So for a total of $196,900 paid over 30 years, the client can potentially draw $834,600 (over the next 30 years) out of the policy on a tax free basis. Yep, you read that correctly. On a tax free basis.

The next argument against whole life typically comes in the form of “buy term and invest the difference.” Often times they’re right, particularly when the client doesn’t have 30 years to let their money accumulate. But rather than lose your attention completely, I’ll stop here and take a break. In a follow up post we’ll tackle that one, with numerical examples so you can see where this does and doesn’t make sense.

One thing to point out here is while we are using the same theoretical client for this example, in real life, the two product examples I’ve used would be applied to two COMPLETLEY different clients. One with a need for basic life insurance protection (i.e. the term product) and one with a decent amount of discretionary cash available to contribute to a long term savings plan. The need for term insurance can be easily identified and solved. The suitability of a whole life policy should only be determined after a thorough discovery process. If someone’s trying to shove it down your throat, run fast.

Thanks for listening. I’m happy to take any questions, and I’ll be back with more on this topic in a future post. Until then…

 

**Please note: there are all sorts of disclosures about theoretical explanations of insurance products. Things like “this example is only for a 35 year old healthy male in California who’s never been skydiving, didn’t party like a rockstar, and doesn’t play with tigers.” You get the picture. The figures here are for explanation purposes only and represent no guarantees related to any specific person reading this. Play nice kids.

This article was previously published on Daily Money Shot.

Destruction Derby insurance? Probably a good idea. If you're into that sort of thing, of course.

Destruction Derby insurance? Probably a good idea. If you’re into that sort of thing, of course.

In Part I of this article, we covered flight insurance, rental care insurance, extended warranties and even life insurance for children, establishing that none of these insurance policies were typically worth your while. In this final portion of this article, we’ll look at six more types of insurance coverage you can feel confident about skipping.

Mortgage Life Insurance

As the name suggests, this type of policy pays off your mortgage in the event of your death, ostensibly so your loved ones needn’t be burdened by a looming mortgage. The reason not to buy mortgage life insurance is really quite simple: if you spent that money on term life insurance, your life policy, if an adequate amount, will cover much more than just the mortgage, taking care of other bills and expenses to ease your survivors’ financial strain.

Credit Card Insurance

Just about every credit card offer these days comes with a pitch for inexpensive credit card insurance, a policy that would pay off your bill should you be unable to do so. While it may seem like a good idea at first blush, if you have several credit cards, those policy payments can really add up. The better idea is simply to avoid running up credit cards entirely and to use them carefully and sparingly. Paying off your balance monthly will not only negate the need for credit card insurance, but you’ll also save a boatload on interest payments.

Disease-Specific Insurance

There are innumerable policies available to cover just about every major illness one could ever suffer, including everything from cancer insurance to diabetes coverage to heard disease insurance. Rather than assembling your health coverage piece mail, all you need to do is purchase one good medical coverage policy. Even a bare-bones major medical policy will cover everything an individual policy would—and having coverage for everything is always better than having coverage just for certain things.

Unemployment Insurance

Most experts agree that it’s far better to put aside regular savings for an emergency fund than it is to shell out premiums for unemployment insurance. While it’s easy to see why this might be an appealing option, relying on your own savings is a far better plan. After all, should you lose your job, odds are that in addition to your savings, you’ll be able to draw unemployment while looking for a new employer. Of course, a great deal of people never find themselves in this position, which means wasted money that could have been saved for something more productive.

Flood Insurance

Despite the terrifying commercials, if your home isn’t in a flood plain or located in an area that’s ever experienced excessive flooding, this is a policy you need not own. Do just a bit of research on your area’s history with water, and you’ll know whether you need to shell out the cash for this rarely necessary coverage.

Accidental Death Insurance

The odds of you dying in an accident are extraordinarily low, especially since most major tragedies that could befall you such as a fire or car accident are covered by other policies. Even if you work a hazardous job, you’re absolutely protected while on the job as well. The lack of real necessity coupled with exorbitant waiting periods and fine print make accidental death insurance a policy you can skip and still sleep well at night.

There are so many policies to chose from, and they all cost money. While a certain amount of insurance coverage is necessary and prudent, you need to choose carefully. In general, broad policies that offer coverage for a multitude of potential events are a better choice than limited-scope policies that focus on specific diseases or potential incidents. Before you buy any policy, read it carefully to make sure that you understand the terms, coverage and costs. Don’t sign on the dotted line until you are comfortable with the coverage and are sure that you need it.

Might of needed bad music insurance for this one.

Might of needed bad music insurance for this one.

Without the ability to see into the future, we often turn to insurance to protect ourselves from the unforeseen. Since we can’t predict our own mortality, we buy life insurance to protect our families’ financial wellbeing. We can never know if the person ahead of us on the road is going to slam on their breaks suddenly, so we purchase auto insurance to cover repairs, and own health insurance to help pay the costs of treating any injuries. Who knows why a burglar would break into your home and not the 24 others that look exactly like it along your street, but thank goodness you have homeowner’s insurance… you get the idea. There are certain kinds of insurance almost everyone should have, such as those listed above, while other types of policies tend to be specific to certain regions or circumstances, and still other kinds of insurance really aren’t worth it for anyone — period. Here’s a list of 10 insurance policies you can feel OK about not buying, as they’re just not worth the money for what these policies ostensibly cover.

Extended Warranties

It seems that whether you’re buying a dishwasher or a BluRay player, the salesperson pushes you to purchase an extended warranty. The fact is, most consumers never end up using these warranties. This is especially true if you make a big-ticket purchase from a reputable brand with a solid history of longevity. Don’t these people have any faith in what they’re selling?

Rental Car Insurance

Almost everyone pays a little more for an auto insurance policy that covers the cost of car rentals (usually limited by a certain dollar amount per day and a maximum amount of days they’ll cover). Many insurers promote this as a sound benefit, just in case your car requires some repair work after an accident. Granted, the price of  having rental care insurance on your auto policy is relatively low, but given how seldom you’re likely to rent a car, you’d save more money over the years to forego this policy and simply pay the low rental car rate yourself should you find yourself in need of a quick replacement.

Children’s Life Insurance 

You most likely own life insurance to provide for your children, heirs or other dependents in the event of your untimely death. Children, however, have no familes they must protect financially, so it makes little sense to purchase this coverage for your kids. Some insurers will argue that by starting a life policy for your children now, they can’t be denied coverage in the future if, for example, it was discovered they had a chronic illness. This is largely a waste of money, since statistically, most children will reach adulthood in good health. A more productive investment in your childrens’ future would be to use that money to fund an individual retirement account (IRA) or an education savings vehicles, such as a 529 college savings plan.

Flight Insurance

There is absolutely no need for you to purchase a flight insurance policy. No matter how much terrifying footage of airplane accidents you may have seen in your lifetime, your chances of being killed in a flight accident is statistically infamentesimal. Even beyond the rarity of these events, however, is that should the worst happen, your life insurance policy will cover this type of tragedy. Furthermore, it’s not uncommon for survivors of airline accidents to receive either settlement or court-ordered recompense through class-action litigation.

That concludes Part I of this article series on kinds of insurance you don’t need. Check back next week for the conclusion of the article, when we’ll look into the merit (or lack therof, as is the case) of six more insurance policies that aren’t worth your time or money.

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