Author Archives: Jay

Experience, Expertise, and Convenience

After we help you find the best life insurance policy to fit your needs, regardless if it is term, universal or whole life insurance. Insurance Shoppers allows you to apply online in the comfort and convenience of your home or office with our assistance over the phone or email (if you like). Or, if you prefer, we can meet with you in person at the time and place that works best for you (Colorado life insurance clients only). Feel free to call or email us whenever you have any questions.

Why Choose An Independent Broker?

Jay Norris has 12 years of experience with Colorado life insurance.Almost all Colorado life insurance companies sell their products through agents, rather than directly to the public. Some companies use ?captive? agents, who can only represent one company. The most competitive term life insurance providers (such as those featured at this site) use independent agents, who are free to represent several companies. These agents can help you select from a variety of products and companies to tailor a plan.

The premium rate is set by the carrier, and it cannot be changed by the agent. The price you pay for a given product will be the same no matter where you buy it. ?Price shopping? for an agent in Colorado will provide no benefit, assuming that you have the basic product and pricing information to know what to ask for. We shop a large number of companies, view the life insurance carriers we shop in Colorado, based on price, coverage, how they will underwrite you, stability, etc. So, we are more likely to find the best coverage at the lowest price than other life insurance agents in Colorado. There is no disadvantage and there are many advantages to using a knowledgeable broker to guide you in the right direction, so don?t hesitate to have us help you find the best plan.

Gender Neutral Pricing For Life Insurance?

For more than a year now, Colorado law has required health insurance carriers to disregard gender when setting premiums. ?In the past, men and women paid different premiums based solely on gender, even if all other factors (health status, zip code, age, etc.) were equal. ?When that law was being debated in the state legislature, opponents compared the gender-based pricing rules with those used by auto and life insurance carriers and noted that gender-based pricing helped to keep premiums as accurate as possible for both men and women, based on their average utilization of the insurance coverage. ?Supporters noted that in the interest of fairness, it made more sense to price insurance policies without regard for gender.

Although the Colorado law banning gender-based premiums passed in 2010 and went into effect in 2011, it only applies to health insurance. ?Auto and life insurance policies have long considered gender when setting premiums, and they continue to do so.

But that is not the case everywhere. ?In a far-reaching ruling, the European Union’s high court handed down a ruling this week banning the use of gender-based pricing for all insurance contracts and pension plans. ?So life insurance premiums (and premiums on all other insurance contracts and pensions) in EU countries will have to be adjusted by the end of this year to reflect unified pricing for men and women.

Given the precedent set by the Colorado law regarding health insurance and now a large international ruling from the EU, it will be interesting to see if we eventually end up with gender neutral pricing for life insurance as well. ?Time will tell.

Do You Need Life Insurance If You Don’t Have Kids?

I recently saw a poll asking people if they thought life insurance was necessary if you don’t have children. ?The majority of the respondents said no. ?This is understandable given that we tend to think of life insurance as a means to provide for our minor children if we die while they are still financially dependent on us. ?Of course there are lots of other purposes for life insurance as an estate planning tool or a means to keep a family owned business intact, but especially when we’re looking at basic term life insurance, providing for children is the number one reason people purchase coverage.

But I think this is a situation where it’s important to consider your own specific situation rather than just the generic advice that is given to people in your demographic (people with children, people without children, single parents, etc.). ?Before you dismiss the idea of a term life insurance policy simply because you don’t have any children, consider the other possible uses for the policy.

For starters, term life insurance for a healthy person is a very inexpensive purchase, especially when compared with the other types of insurance that we can buy (disability, health, auto, etc.). ?And the younger and healthier you are when you buy it, the less expensive it is. ?So although you might not have children yet, if you’re planning to have them a few years down the road you might want to get a term life insurance policy in place sooner rather than later. ?You can opt for a 30 year term in order to cover your potential child’s entire childhood, even if that child isn’t born for several more years.

Another thing to consider is that a term life insurance policy can be used to provide for a surviving spouse or partner, even if that person has their own source of income. ?If you’re in a long-term relationship where you both work and contribute financially to the household, what would the sudden loss of your income mean for your partner? ?Would he or she have to sell your shared home because his or her income alone would no longer be enough to cover the mortgage? ?The surviving partner might indeed decide to sell and relocate or downsize, but it’s nice to be able to do that on one’s own terms rather than being forced to sell quickly because there isn’t enough money to cover the current living expenses.

In addition to covering expenses until the surviving partner is able to downsize his or her life to match his or her solo income, a small life insurance policy might allow the surviving partner to take some time off work to grieve and come to terms with the loss without having to worry about paying the bills right away.

If you don’t have children, your need for basic life insurance is going to be considerably less than it would be if you did have children. ?But a small term policy might be the perfect way to provide a cushion for an adult who relies on you emotionally and/or financially, even if that person is technically capable of supporting him or herself entirely. ?Life insurance is about peace of mind and creating the sort of life you would like for those who are left behind. ?With no life insurance proceeds, a surviving spouse might have to struggle to make ends meet, sell the house, or work extra hours during an emotionally wrenching time in order to pay the bills. ?A small life insurance policy could be the thing that makes the financial aspect of the whole situation easier to bear.

126th Cavalcade Of Risk

Welcome to the 126th Cavalcade of Risk, where we’re showcasing the best in risk-related writing from around the web.? As a primary risk-management tool, insurance in all of its various forms tends to show up a lot of the posts, but there’s something for everyone here, so dig in…

cards To start things off, we have a compelling article from Scott Bartlett about the dangers of progress.? Scott’s post is inspired by the book A Short History Of Progress by Ronald Wright.? It’s a reminder of the ultimate risk to all of us if we don’t take care of this little planet we all call home.? But more then the usual articles about climate change and environmental degredation, Scott also looks back over centuries of history to see how the rise and fall of civilizations is often linked to resources and their depletion.? Sobering, yet an excellent read.

To put a visual spin on the idea of risk, Julie Ferguson of Workers’ Comp Insider brings us a photographic depiction of workers performing all sorts of tasks far from terra firma.? If you’re leery of heights, these are probably not the jobs for you.? There are pictures of modern workers, as well as plenty from days gone by, and it’s interesting to note the complete lack of safety equipment in some of the older shots.

Life Insurance And Estate Planning

plane Jim Yih of Retire Happy Blog brings us Cathy’s story of life insurance.? It’s an excellent example of a scenario where term life insurance makes much more sense than permanent life insurance.? Term life insurance is a perfect product for someone who is insuring her life in order to protect her children, since we can assume our children will only be financially dependent on us for a finite length of time.? And since it’s a lot less expensive than universal or whole life insurance, a term policy allows a person to have a policy with a higher face value and lower premiums.

Free Money Finance also writes about term life insurance, taking to task a recent WalletPop article that included term life insurance as a type of coverage that is “not worth the money”.? I think FMF’s take on this is absolutely correct.? For some people, permanent life insurance might be just the right product.? But anytime a planner or advisor is recommending permanent life insurance as being generally a better option, it’s a good idea to question how much more commission they will get if the client goes with permanent life insurance.

Continuing on the importance of estate planning, Jeff Rose of Good Financial Sense tells us what happens if you die without a will.? Basically, all assets will pass through probate, and state laws will determine how your money and possessions are doled out – and who will care for your minor children.? The way the state does it may be far different from how you would want it done, which is why having a will is such an important part of financial planning.

quake Russell Hutchinson of Chatswood Consulting Limited takes a look at whether the Christchurch, New Zealand earthquake will impact life insurance premiums.? He notes that although the loss of life was tragic, the payouts in terms of life insurance settlements will be quite small when compared with the payouts for property damages from the quake.? He concludes that events like the recent earthquake will usually not impact life insurance premiums rates at all.

Health Insurance And Healthcare Reform

Jaan Sidorov of the Disease Management Care Blog delves into some of the financial nitty gritty behind the idea of patient centered medical homes.? The PCMH concept has become quite popular during the course of the healthcare reform debates, but Dr. Sidorov’s article brings into question the financial sustainability of such models, as it appears that they won’t be making much money.? The idea is for the clinics to be paid on a per member per month basis, but the actual amounts that would likely be paid are startlingly small.

racecars InsureBlog’s Bob Vineyard tells us about a European ruling which prohibits companies from using gender in setting prices for products like insurance and annuities.? Turns out that there could be some unintended (and not-so-great) consequences, such a young men buying higher performance cars because their auto insurance premiums are artificially reduced.? Here in Colorado, health insurance premiums are no longer allowed to be based on gender.? It will be interesting to see if similar laws catch on across the country, or with regards to other products, like auto insurance.

Jason Shafrin of the Healthcare Economist looks at a proposal from the Healthy Trucking Association of America and the Convenient Care Association, for a plan to provide health insurance to truck drivers that would allow them to access care congress wherever their job may take them.? The integrated medical home concept works well for people who are generally in the same geographic location from one day to the next – but truck drivers need access to care all over the country.

Eric Turkewitz of the Terkewitz Law Firm writes and open letter to NY lawmakers, encouraging them to reject a proposed measure that would cap pain and suffering damages at $250,000 in medical malpractice lawsuits.? While we tend to hear a lot from people who are in favor of tort reform measures like the cap on non-economic damages, Eric’s letter provides quite a bit of detail from the other side, and explains why it would do more harm than good to place such a cap.

The Consumer Boomer gives us an overview of how Medicare Advantage programs work, the details about what the various Medicare plans cover, and information needed for enrollment.? Good info for anyone approaching retirement age and starting to look at how health insurance works once we turn 65.

P&C Insurance

Nancy Germond of All Business explains why your home may be underinsured.? The problem seems to stem from the fact that many insurance carriers give the homeowner the responsibility of determining the replacement value of a home, and that may not be the same as the market value of the house.? Nancy notes that a better option is an insurance carrier that will do an independent appraisal, or one that will add a percentage cushion to the determined replacement value in order to more adequately account for increases in replacement cost.

Neal from Wealth Pilgrim explains that if you need to file a claim with your homeowner’s insurance, hiring a private insurance adjuster can be a good way to make sure that you get as much money as you’ll actually need to repair or rebuild your home.

Canadian Finance Blog explains the basics in terms of how auto insurance premiums are calculated😕 type of coverage, how much you drive, what kind of car you drive – they all play a factor.? I’ve read that some auto insurance carriers even look at credit scores in order to set prices.

Other Risky Business

alt Health Blog’s David Williams discusses whether parents should be allowed to give teachers gifts.? While regulating such things might at first seem trivial and intrusive, David points out how gifts from pharmaceutical companies to doctors have been shown to influence the doctors’ prescribing habits.? Observation of the relationships between doctors and pharmaceutical companies when gifts are involved should give us pause to consider the fact that there is always a risk of compromising integrity when gifts are allowed.? Good food for thought.

The Dough Roller tells us about identity scores.? I wasn’t aware such a thing existed, but an identity score – compiled using data from a much wider source of data than credit scores -? is used by lenders as an indicator of how likely it is that a credit applicant is using a fake identity.? The higher the number, the more likely it is that an applicant is committing identity theft.? The article includes details about how you can check your ID score and make sure that it doesn’t contain errors.

Credit Card Guru takes us for a closer look at payment protection insurance, and concludes that it’s usually not worth the money.? Sure, programs like that help to alleviate some risk (for people who carry a balance on their credit cards and would have a hard time making payments if they were faced with an unexpected job loss, illness, etc.) but it appears that the insurance is pricey and has a lot of fine print.

Heather Hollingsworth takes a look at how unrest in Egypt and the rest of the Middle East could impact global financial recovery from the recession.? Since so much of the world’s oil comes from the Middle East, protests and regime changes there can have an effect all over the world.

That wraps up this edition of the Cavalcade of Risk.? Thanks for all the great submissions!

Increasing Premiums For Universal Life Insurance

Most people who have financial dependents have a genuine need for life insurance. ?But for the majority of those people, a simple term life insurance policy can fulfill that need in a relatively uncomplicated, inexpensive manner. ?A term policy purchased in early to mid adulthood that lasts for 20 or 30 years (with a fixed premium during that time frame) will protect most families throughout the time when they are financially responsible for children and debts like mortgages. ?After the children are grown, and the mortgage is paid off, and especially after retirement, there is much less of a need for significant life insurance death benefits for most people.

For some people with more complex financial situations (such as a family business that they would like to leave to their heirs, for example), permanent life insurance may be a more appropriate choice. ?But such policies are much more expensive than term life insurance, and tend to be more complicated too. ?For people who really only have a genuine need for the protection offered by term life insurance, the investment benefits associated with permanent life insurance can usually be obtained in a more straightforward manner by simply investing the additional premiums that would have been needed to purchase permanent life insurance.

Although permanent life insurance products can be a useful tool for some clients, purchasing them might not be truly the best financial move for many people who might be better served by a basic term life insurance policy and a separate investment program to accumulate money for later in life and/or to pass on to heirs. ?However, the commissions for agents who sell permanent life insurance is significantly higher than the commissions for term life insurance policies, in part because the policies themselves are so much more expensive. ?This can potentially create a conflict of interest if a client is taking policy recommendations from an agent who will receive the commission for whatever policy is ultimately purchased.

In a reminder that Universal Life insurance (a form of permanent life insurance) premiums are not fixed, a recent class action lawsuit in CA ended with a federal judge ruling that Conseco Life Insurance Co. cannot triple premiums for 50,000 policy holders who have had their policies since the late 80s and early 90s. ?The courts got involved because the proposed premium increases were so significant, but the complexities of universal life insurance include a lot of flexibility in terms of premiums. ?If interest rates drop (as was the case for people who bought policies in the 80s, when interest rates were much higher than they are today), future premiums can increase significantly. ?Although the court has ruled that Conseco cannot triple the premiums for those policy holders, there’s no set limit for how much premiums can increase. ?Older policy holders who have had their coverage for decades can find themselves unable to keep their policy in force if premiums rise beyond what they can afford.

Anyone in the market for a life insurance policy should be well aware of the differences between term life insurance and permanent life insurance, and should understand the long term implications of each type of coverage before selecting the best option for their particular situation.

Viatical Settlements – Buy At Your Own Risk

This Wall Street Journal article from last week reminds me of the advice we hear about things that sound too good to be true. ?Viatical settlements or “life settlements” are arrangements in which investors (or intermediary companies) purchase existing life insurance policies from people who they think (hope?) will die within the next few years. ?The investors then continue to pay the premiums on the policies until the original policy owner dies (at that point, the investor gets to collect the life insurance pay out).

Life Partners – a company that purchases the policies and then resells them to investors – advertises that its policies are “priced to target a compounded return of 12-14% at life expectancy.” ?But it looks like they have been underestimating (by a wide margin) the life expectancies of the insureds whose policies they purchase. ?If the insured lives longer than the company has predicted, the investors’ returns start to drop off. ?And it looks like the vast majority of the policies purchased by the company over the last several years are still in force, even though many of them were expected to “mature” (ie, the original policy owner was expected to die) by now.

Last year, Fred Joseph, the Colorado Securities Commissioner, testified at a Senate hearing that viatical settlements present “… significant risk to policy holders and investors.” ?And Colorado securities regulators have tussled in court with Life Partners, alleging that the company doesn’t disclose to investors how accurate their life expectancy predictions are, or the fact that if future premiums aren’t paid, the policies can lapse (although that aspect of insurance is relatively common knowledge, in a life settlement scenario it’s possible that investors might not understand that they have additional financial responsibility beyond the purchase price of the policy).

Viatical settlements do provide both an investment opportunity as well as a way for insureds to cash in on a portion of the face value of their life insurance policy before they die. ?But they are not a get rich quick scheme. ?In addition to the moral questions some might have about betting on a stranger’s somewhat rapid demise, there’s also a risk that the insured might live far longer than the projected estimate, and the premiums that the investor must continue to pay will slowly eat away at the anticipated return on the investment.

Disability And Long Term Care Riders On Life Insurance Policies

One of the advantages of permanent life insurance is that there are all sorts of riders that you can purchase along with the policy. ?Two that could be particularly useful are available through The Hartford: ?The LifeAccess rider and the Disability Access rider. ?The LifeAccess rider aims to take the place of a long term care insurance policy for people who have life insurance but not a separate long term care policy. ?The Disability Access rider provides a safety net for people who don’t have short term disability insurance coverage (the rider does not provide long term disability coverage).

Sales of the LifeAccess rider are up 80% nationally (the rider was first introduced in 2007) in the past year, and that may have something to do with the rising price of long term care policies recently. ?The rider can be added to a permanent life insurance policy for a cost ranging from 5% to 15% of the cost of the life insurance policy. ?The rider will generally be less expensive than a long term care policy on its own, but the cost of the permanent life insurance will be much more than the cost of a term life insurance policy with a similar face value. ?For most people, it probably makes more sense to purchase a term life insurance policy and a separate long term care policy. ?But for people who have a genuine need for a permanent life insurance policy, adding a long term care rider could make a lot of sense. ?In addition, the LifeAccess rider is more leniently underwritten than stand-along long term care policies, which might make it an attractive option for applicants with less than perfect health.

The Disability Access rider has been available from The Hartford for a little over a year, and costs an additional 6% to 10% of the cost of the life insurance policy. ?It has a monthly benefit cap, and a lifetime cap of up to 24 monthly payments. ?The monthly benefit cap is calculated when the policy is issued, and cannot exceed $5,000. ?The money can be used to protect the insured’s lifestyle/income in the event of a disability, or to pay for a buy/sell agreement or key man insurance policy depending on the insured’s business situation. ?As with the LifeAccess rider, this rider only makes sense if the insured truly has a valid need for a permanent life insurance policy and is able to pay the premiums that it entails. ?For some people, it will be a good option, although term life insurance and a separate disability insurance policy might be a better choice for a lot of people.

Term Life Insurance Sales Lower In Second Quarter

There was a sharp increase in the number of life insurance policies sold in the first quarter of 2010 when compared with the same time period in 2009. ?And now the second quarter of 2010 has posted another strong increase. ?Compared with the second quarter of 2009, annualized premiums for individual life insurance policies were up 7% in the second quarter of this year.

Whole life, universal life, and variable universal life are all being purchased more this year than last year. ?But term life insurance did not show gains; annualized premiums for term policies dropped 11% in the second quarter of 2010. ?I find this interesting, given that term life insurance tends to be the most appropriate choice for the majority of the population that needs to secure death benefits.

It’s possible that the slowly-rebounding economy is responsible for the shift from term to permanent life insurance products, and for the overall upswing in total annualized premiums. ?For the last couple years, the recession has meant that most of the country has been tightening their budgets. ?Term life insurance policies are a lot less expensive than permanent policies, so for people who needed to buy life insurance during the recession, term products were likely more popular. ?But now that the economy is showing signs of recovering, people may be more apt to purchase higher-cost permanent life insurance policies that grow cash value or include an investment component. ?It will be interesting to see how the numbers play out for the rest of 2010… will term life insurance policy sales bounce back, or will the growth of permanent policies continue?

What To Do With Life Insurance Proceeds

When a person loses a loved one and is the beneficiary of a large chunk of life insurance money, the handling of that money might take a back seat to dealing with grief and loss. A death in the family – especially if the person who died is a primary earner – will likely result in some financial upheaval, but it will also be emotionally devastating, and survivors may be ill-equipped to make major decisions about what to do with the life insurance money they receive, especially if it’s a large sum.

A recent NPR article details how the families of servicemen and women killed in battle are being given “checkbooks” that represent the value of the fallen soldier’s life insurance policy. The life insurance companies are keeping the money in their own investment accounts, earning several percent interest, and paying 0.5% interest to the policy beneficiaries. The carriers point out that if they didn’t offer this option for the families to earn half a percent interest on the money, it might just sit somewhere, earning no interest at all. I suppose that’s true, but families should be aware that they have lots of options, and that taking the default choice of letting the life insurance company handle the money for them (and keep a good chunk of the interest earned) might not be the best one.

Trying to figure out what to do with a large chunk of money from a life insurance settlement can be difficult in the best of times, and nearly impossible when a person is grieving. It makes much more sense to sketch out the details of what your family would do with any life insurance money before that situation arises. If you don’t die while your life insurance policy is in force, the plan won’t ever be needed. But if you do pass away and leave your beneficiaries with life insurance money, it will make things a lot easier for them if the family has a plan in place and they can simply use the money as planned, without having to make decisions while grieving. And it will make it much less likely that the surviving family members will be duped by unscrupulous “advisors” or companies that don’t have the beneficiaries’ best interests in mind.

A financial advisor can provide advice, but there are also lots of financial advice websites that can provide guidance for people trying to figure out what to do with any sort of windfall, including life insurance proceeds. Planning now for what you might do with life insurance money will likely make things easier if and when you find yourself receiving life insurance following the death of a loved one.

Comparing Life Insurance Options

This week’s Cavalcade of Risk included an informative article at the Consumer Boomer blog about how to compare different types of life insurance policies. ?The article did a good job of detailing the major differences between term life insurance and permanent life insurance (both universal and whole) but not much was said about the cost differences, other than to note that the permanent policies are “more expensive”. ?Permanent life insurance is dramatically more expensive than term coverage – often ten or twenty times as much in annual premiums. ?For some people, the benefit is worth it. ?But for most of us, it makes sense to buy a term policy and keep our investments separate from our life insurance. ?But either way, the Consumer Boomer article provides a good summary of how the various types of coverage work. ?If you’re in Colorado and you’d like to get quotes for your particular life insurance needs, we’re be happy to help.