The 30 day war!

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3rdyrp2's picture
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hotair1 wrote:Your both are making WILD assumptions. She might need 100k, that's it.  500k is over kill to fill your pockets with an extra dime.  9 times out of 10 there is no damn 22 year old in the world that needs 500k. 
 
Her saving for retirement early is a much better decision. 
 
Explain this to me.  She's 22, so retirement isn't for another 40 or so years.  Why would saving for something 40+ years away be so much more important than covering something that may be a necessity within 1, 5, 8, 12, or 17 years?  Is that $30/month going to shoot her retirement savings plan down like a sniper gun?
 
She can buy more term when she get's older.
 
You're saying he should have her go back through underwriting every 3 years when her "need" increases?  Why not just knock most of it out at once when the price difference is only a couple bucks a month, AND she is healthy enough to get the stuff.
 
PLUS .. you insurance guys always try to over insure people.  ALWAYS. 
 
So?  Better than being underinsured. 

Moraen's picture
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I don't even sell insurance - at all. But even I recognize the need.

I'm not making wild assumptions. I don't know this girl's case. I did not do a fact finder on her.

The simple fact is, none of us know.   Young people die every day. More people died between 18-22 years of age in vehicle accidents last year than in Iraq and Afghanistan combined. Several of those 18-22 year-olds had kids.

For someone to say that 22 year-olds don't need life insurance as a blanket statement is incorrect.

Spaceman Spiff's picture
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Not very many extra dimes evidently.  You've got to think longer term with this stuff. 
 
You are technically correct.  She doesn't NEED a $500k term policy.  However, once she gets it, she's got it.  There are a lot of what if scenarios that come up where owning this policy now is a big benefit. 
 
For example.  I have a 50 year old prospect with Leukemia.  He's got a 20 year convertable term policy that he bought about 18 years ago.  He knows it's going to end in a couple of years, but he's uninsurable now.  He and his wife blew all their money a few years ago when he thougth he was going to kick the bucket.  Turns out he's doing well, but he's really behind the retirement savings 8-ball.  His concern is for his wife.  What if his Leukemia comes out of remission 5 years from now, after the term policy has ended, he dies and leaves his wife behind to pick up the pieces?  He knows they don't have the money to keep her in their house living the lifestyle she's used to.  So, he's going to turn his term into permanent so that if it happens she's not thrown out on the street or forced to sell the house at a deep loss to lower the bills.  He's uninsurable right now, so it's not like he can go out and get a new policy to replace the one that's ending. 
 
So, no, she doesn't need the policy, but life happens.  Our job is to mitigate risk.  $1 a day mitigates a lot of risk. 
 

3rdyrp2's picture
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Spaceman Spiff wrote:For example.  I have a 50 year old prospect with Leukemia.  He's got a 20 year convertable term policy that he bought about 18 years ago.  He knows it's going to end in a couple of years, but he's uninsurable now.  He and his wife blew all their money a few years ago when he thougth he was going to kick the bucket.  Turns out he's doing well, but he's really behind the retirement savings 8-ball.  His concern is for his wife.  What if his Leukemia comes out of remission 5 years from now, after the term policy has ended, he dies and leaves his wife behind to pick up the pieces?  He knows they don't have the money to keep her in their house living the lifestyle she's used to.  So, he's going to turn his term into permanent so that if it happens she's not thrown out on the street or forced to sell the house at a deep loss to lower the bills.  He's uninsurable right now, so it's not like he can go out and get a new policy to replace the one that's ending. 
 
So, no, she doesn't need the policy, but life happens.  Our job is to mitigate risk.  $1 a day mitigates a lot of risk. 
 
This kind of stuff happens all the time.  I remember about 18 months ago I'd scheduled a meeting w/one of my clients to go over long term care options.  They both indicated during their initial meeting that they were both interested at some pt. in looking at some options.  Turns out they cancel the meeting.  Why?  Because the husband went in for a physical and they found a clogged heart valve that needed open heart surgery.  The condition is now chronic and he's uninsurable.  He's only 53, and most likely wouldn't NEED nursing home care for another 20-25 years minimum otherwise, but now we just have to hope it never becomes an issue.

Gaddock's picture
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If she's hot you should bone her and send her on her way. Be a lot more fun than schlepping a term life app. that only has a couple hundred in annualized life premium.
 

svm21's picture
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3rdyrp2 wrote:hotair1 wrote:You insurance guys are idiots.  This chick does not need 500k in life insurance.  She MAYBE needs disability insurance.  Set her up a nice little roth, a small amount of disability insurance, and make sure she is using her 401k at work.  You'll get business down the road and hopefully she'll refer you to her parents.  With no dependents and at 22 she does not need freaking life insurance and won't be able to vizualize her future need for it so she is likely to cancel the policy at age 23 anyway.
 
My god, 500k term insurance.  IDIOTS!
 
ANANOLOSER, save me the drama of your long winded hypothetical reason she needs it.
 
Here's why you're the idiot:
 
At age 22 how much will a $500,000 term policy cost?  $30 a month?  If she decided not to get life insurance where would that $30 be going?  Starbucks?  The mall?  Something that doesn't make her financial situation better?  More than likely that same $30 wouldn't be systematically being saved somewhere, and even if it was, its $30 freaking dollars.  In 3 years the girl is married and is buying a house.  Now she has an insurance need of anywhere from $500,000-$1,000,000.  2 years after that she has a kid, and now all of a sudden her insurance need is an extra $500,000-$1,000,000.  Please explain the rationale why it is insane to buy a small insurance policy a couple years before you actually need more than that?  You're locking in future insurability knowing that within a couple of years it will be imperative to have that coverage in force.  How much do you think we make on a $30/month term policy?  I would make $200 GDC on that, and net $75 payout on that.  We ain't getting rich off the stuff, its doing whats best for the client.$1 million dollars at 22?!  Kids at 27? $ 2 million of life insurance at 27 for a stay at home mom?!  Dude, you are out of your mind. You must sell a sh*tload of insurance with that level of conviction. Yikes

BerkshireBull's picture
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3rdyrp2 wrote:BerkshireBull wrote:anonymous wrote:BerkshireBull, I have to completely disagree with the UL suggestion.  UL is a product that absolutely sucks long term.  The flexibility that is looked upon as a positive is one of the worst parts about the product.  Human nature gets in the way.  If a premium payment isn't necessary, one may get skipped.  Skipping premiums drasitcally increase the chance of lapse.  At $40/month for $100,000, ultimately, she will end up with no cash and no insurance when she gets older.   If her health changes, her family will have a Mom that is drastically underinsured.
 
At this point she is much better off buying a $500,000 term policy that is less than $20/month and putting the balance into savings.

 
There is no way underwriting is going to let you write that much face value on a single 20 year old with no dependents making $15,000 per year.
 
I think I'd beg to differ on this one.  I think she's 22, but you can get a half mil term policy on someone earning $15,000.  Their human life value is over half a mil if they have the SAME salary until age 65.  Underwriters will understand too based on age that within a year or so that person will be earning much more than $15k.

 
Most companies will only go up to 25x annual income.

svm21's picture
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 This is why insurance rep's have bad reputations. 

3rdyrp2's picture
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svm21 wrote: 3rdyrp2 wrote:hotair1 wrote:You insurance guys are idiots.  This chick does not need 500k in life insurance.  She MAYBE needs disability insurance.  Set her up a nice little roth, a small amount of disability insurance, and make sure she is using her 401k at work.  You'll get business down the road and hopefully she'll refer you to her parents.  With no dependents and at 22 she does not need freaking life insurance and won't be able to vizualize her future need for it so she is likely to cancel the policy at age 23 anyway.
 
My god, 500k term insurance.  IDIOTS!
 
ANANOLOSER, save me the drama of your long winded hypothetical reason she needs it.
 
Here's why you're the idiot:
 
At age 22 how much will a $500,000 term policy cost?  $30 a month?  If she decided not to get life insurance where would that $30 be going?  Starbucks?  The mall?  Something that doesn't make her financial situation better?  More than likely that same $30 wouldn't be systematically being saved somewhere, and even if it was, its $30 freaking dollars.  In 3 years the girl is married and is buying a house.  Now she has an insurance need of anywhere from $500,000-$1,000,000.  2 years after that she has a kid, and now all of a sudden her insurance need is an extra $500,000-$1,000,000.  Please explain the rationale why it is insane to buy a small insurance policy a couple years before you actually need more than that?  You're locking in future insurability knowing that within a couple of years it will be imperative to have that coverage in force.  How much do you think we make on a $30/month term policy?  I would make $200 GDC on that, and net $75 payout on that.  We ain't getting rich off the stuff, its doing whats best for the client.$1 million dollars at 22?!  Kids at 27? $ 2 million of life insurance at 27 for a stay at home mom?!  Dude, you are out of your mind. You must sell a sh*tload of insurance with that level of conviction. Yikes
 
Whoa, whoa, whoa.  I didn't say $1,000,000 at 22.  I said its not UNREASONABLE to sell someone a $500,000 policy at age 22.  Its also not unreasonable to have a kid at age 27.  And why is she a stay at home mom?  Where did all these assumptions come from?  If she is married with a mortgage and a kid at age 27, depending on her income (I work in DC, where incomes are very high and so are mortgages, and the concept of "stay at home mom" has gone the way of the Dodo bird) her insurance need could EASILY be $2,000,000.  It's not extremely common, but it happens.

svm21's picture
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Impossible. No 27 year old needs $2 million. Unless you are a I-banker at Goldman, own a nice apartment in the East Village, and have a wife with three kids under the age of 5 at home. If your not that guy/girl then you don't need that much. Please.  Drink the kool-aid. Go ahead drink it. We know you like it.

3rdyrp2's picture
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I get the vibe that insurance doesn't play that large a part in your book of business.

svm21's picture
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It once did. Im a former NWM guy. Great company, notoriously expensive polices. 

3rdyrp2's picture
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Here's a fun fact about me:  I've never sold a policy of over $1,000,000.  Only twice have I recommended anything over $1,000,000 to a client.  I personally think that if one of my clients died, the spouse/children/heirs would get by on a million bucks.  They don't need to pay the mortgage off right away, they don't need to max fund retirement right away.  I think they'll get by.  My thing is, I can see how having that additional insurance would reduce ALL of the burden that a family does not need, but will face, at a difficult time like that.  The last thing a new widow/widower needs is to all of a sudden be stuck w/a $750,000 mortgage, two kids and $100,000 less income coming into the house.  A half million bucks isn't going to eliminate that burden.  A million bucks may not even be sufficient long term

svm21's picture
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Good point. However if they have a 750k Mortgage and the other spouse was only making 100k. Well then they never had a chance. Darwinism at its best. Poor kids. Just kidding, point made.

anonymous's picture
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hotair1 wrote:You insurance guys are idiots.  This chick does not need 500k in life insurance.  She MAYBE needs disability insurance.  Set her up a nice little roth, a small amount of disability insurance, and make sure she is using her 401k at work.  You'll get business down the road and hopefully she'll refer you to her parents.  With no dependents and at 22 she does not need freaking life insurance and won't be able to vizualize her future need for it so she is likely to cancel the policy at age 23 anyway.
 
My god, 500k term insurance.  IDIOTS!
 
ANANOLOSER, save me the drama of your long winded hypothetical reason she needs it.

 
One of the first death claims that I paid was on a guy in his late 20's.  He was about 25 and single when he bought a life insurance policy from me.  Not too long after that he knocked up his girlfriend and they got married.  Before the baby was born, he found out that he had cancer.  He died shortly after having his child. 
 
One can't buy insurance just because they need it.  One can only buy insurance at decent rates when they can prove that they aren't dying and they are healthy.  Insurance is purchased with one's health and not dollars.
 
The question really needs to be whether the purchase of insurance is worthwhile to protect a future insurance need.
 
If insurance was free, should she get it even though it's not needed yet?  Of course.  If it was $1000/month, should she get it?  Of course not.  What if it was less than $15/month?
 
Gentleman, for a healthy 22 year old female, an annually renewable $500,000 convertible term policy costs less than $15/month.   Every week, I talk to at least one person who needs coverage and can't get it at decent rates.  Is it worth $15/month to protect one's insurability?  It sure seems like a no brainer to me.  Policies get canceled because people can't afford them.  $15/month policies don't get canceled.
 
Maybe disability insurance?  Unless she doesn't need income, there should be no maybe in front of disability insurance.
 

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hotair1 wrote:Your both are making WILD assumptions. She might need 100k, that's it.  500k is over kill to fill your pockets with an extra dime.  9 times out of 10 there is no damn 22 year old in the world that needs 500k. 
 
Her saving for retirement early is a much better decision.  She can buy more term when she get's older.
 
PLUS .. you insurance guys always try to over insure people.  ALWAYS.  "you need 10x you annual salary"  Right.... forget to mention the tax free nature of insurnace and that salary she would have gotten was taxed did ya?  Good for you for being honest. 

 
Extra dime?   The ANNUAL premium for $100,000 is $91.  The premium for $500,000 is $150.  It should be pretty obvious that this has nothing to do with commission.
 
Do you really believe that this has any impact on how much she saves for retirement? 
 
As for the 10x salary, using a multiple isn't a smart way to determine need, but it sounds like you think that 10x is some big number.
 
10x isn't a big number.  Joe makes $100,000 and is 30 years old with 3 young kids.  If his income increases on average by 4% a year, his total income would be over $7,000,000.   If his income is replaced by a lumpsum of $1,000,000, his wife can probably safely take an income from it of $40,000 before tax.  That's a pretty big income hit.  Don't forget that money from this also needs to be invested for retirement to replace his 401(k) and the match.   In some situations 10X will be plenty.  Other times, it won't be.  It isn't a big number. 
 
Also, since term life insurance is so cheap, when in doubt about insurance premiums, shouldn't one buy too much instead of too little?  If he's healthy, a 20 year policy for $750,000 would cost $322.  $1,250,000 would cost $485.  Why would we recommend that someone pinch pennies in this situation?  The extra $500,000 of coverage is $13/month. 
 
Much of what I sell is combinations of whole life and term insurance.  In this case, the premium (and my commission) is identical regardless of how much coverage is purchased.

anonymous's picture
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"$1 million dollars at 22?!  Kids at 27? $ 2 million of life insurance at 27 for a stay at home mom?!  Dude, you are out of your mind. You must sell a sh*tload of insurance with that level of conviction."
We're making lots of assumptions here.  How much coverage should a stay at home mom have?  We're missing facts, but I would argue that the amount is usually greater than someone thinks.
 
Why does someone choose to be a stay at home mom?  It's often because that is what the family thinks is best for their situation.  They want a parent to be home raising the kid.  In these situations, what happens if the mom dies?  Ideally, the dad can be a stay at home dad.  This doesn't need to be permanent, but raising the kids does need to take precedence over making money.  Life insurance allows the kids to come first.  Life insurance on a stay at home mom serves the purpose of replacing the bread winner's income. 
 
Again, I can't state it enough, since the cost of term insurance is so cheap, it makes sense to buy enough to make sure that the family can thrive instead of just enough to survive.

anonymous's picture
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"Most companies will only go up to 25x annual income."
 
No companies limit it in this manner.  Companies have limits like this for the amount that they will issue without wanting more information.   To get more coverage simply just takes an explanation.
 
"She only made $15,000 last year, but it was her first year in the job.  We expect her income to be closer to $50,000 this year."  All of a sudden, getting $500,000 of coverage is no longer an issue.

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svm21 wrote:Impossible. No 27 year old needs $2 million. Unless you are a I-banker at Goldman, own a nice apartment in the East Village, and have a wife with three kids under the age of 5 at home. If your not that guy/girl then you don't need that much. Please.  Drink the kool-aid. Go ahead drink it. We know you like it.

 
Won't $2,000,000 give a family a safe income of around $80,000 a year before tax?   This is a ton of money for someone making $40,000.  It's not so much for someone making $150,000 with plans to send the kids to private school. 

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3rdyrp2 wrote:Here's a fun fact about me:  I've never sold a policy of over $1,000,000.  Only twice have I recommended anything over $1,000,000 to a client.  I personally think that if one of my clients died, the spouse/children/heirs would get by on a million bucks.  They don't need to pay the mortgage off right away, they don't need to max fund retirement right away.  I think they'll get by.  My thing is, I can see how having that additional insurance would reduce ALL of the burden that a family does not need, but will face, at a difficult time like that.  The last thing a new widow/widower needs is to all of a sudden be stuck w/a $750,000 mortgage, two kids and $100,000 less income coming into the house.  A half million bucks isn't going to eliminate that burden.  A million bucks may not even be sufficient long term

 
You either have poor clients or you are doing them a disservice.   Do your clients want their families to just get by or do they want them to thrive?  I'm guessing that you don't have kids.  Nobody wants their family to struggle.  You will have clients who die prematurely.  For a few extra dollars, they wouldn't have to struggle.

BerkshireBull's picture
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This is totally off the topic but would you mind sharing how much life insurance you personally carry and the type, anon?  (Just curious, this is not an attempt to insult or anything)

3rdyrp2's picture
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anonymous wrote:3rdyrp2 wrote:Here's a fun fact about me:  I've never sold a policy of over $1,000,000.  Only twice have I recommended anything over $1,000,000 to a client.  I personally think that if one of my clients died, the spouse/children/heirs would get by on a million bucks.  They don't need to pay the mortgage off right away, they don't need to max fund retirement right away.  I think they'll get by.  My thing is, I can see how having that additional insurance would reduce ALL of the burden that a family does not need, but will face, at a difficult time like that.  The last thing a new widow/widower needs is to all of a sudden be stuck w/a $750,000 mortgage, two kids and $100,000 less income coming into the house.  A half million bucks isn't going to eliminate that burden.  A million bucks may not even be sufficient long term

 
You either have poor clients or you are doing them a disservice.   Do your clients want their families to just get by or do they want them to thrive?  I'm guessing that you don't have kids.  Nobody wants their family to struggle.  You will have clients who die prematurely.  For a few extra dollars, they wouldn't have to struggle.
 
One thing I do quite often actually is recommend them buying life insurance from other places if they need more than they should buy from me.  My area of the country is heavily infiltrated with military people, so theres a 60% chance that someone in a client household of mine has the means to open a USAA account, and their term insurance destroys ours.  Several of my clients have bought insurance of over $1,000,000 from them.  It's not a huge priority of mine to have a client buy insurance through me if its not permanent (Too much of a headache w/underwriting follow-up and very rarely does the process go smoothly), and clients appreciate me outsourcing some of the stuff so they know I'm not out to get ALL the commission.  I've had zero complaints about this type of strategy from any of my clients.

voltmoie's picture
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Every insurance guy I've ever met has a horror story of the perfect non-insurance storm.  Problem is they are all living to tell it and so are their clients...

svm21's picture
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your right about the USAA thing. Insane cheap. Insane. 

anonymous's picture
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BerkshireBull wrote:This is totally off the topic but would you mind sharing how much life insurance you personally carry and the type, anon?  (Just curious, this is not an attempt to insult or anything)

 
I carry several million dollars worth of coverage.  (More than $3,000,000 and less than $10,000,000.)
 
I have some whole life.  I have some annually renewable term coverage that will ultimately get converted.  I have some cheap 20 year level term insurance that will ultimately get dropped. 

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voltmoie wrote:Every insurance guy I've ever met has a horror story of the perfect non-insurance storm.  Problem is they are all living to tell it and so are their clients...

My dead clients aren't alive to tell about it.  Someone's health changing is not a perfect storm.  It doesn't take a perfect storm for someone to die.  Look at the obits today.  Someone with young children will be listed. 
 
One of my clients is uninsurable and although he is currently pretty healthy (from a feeling perspective), he has very little chance to live 5 years.   His wife recently had a baby.  He's very scared about the fact that he won't be able to provide for them.
 
The one thing that most of the people who can't get insurance at decent rates have in common was that in their 20's, they were usually still insurable.   We can all agree that insurance is important.   When something so important is so inexpensive, it doesn't make lots of sense to not buy it.

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svm21 wrote:your right about the USAA thing. Insane cheap. Insane. 

 
What am I missing here?  Plenty of companies are less expensive than USAA for term insurance.   For any age, for any amount, there are usually 10+ companies that are less expensive than USAA. 

Moraen's picture
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Joined: 2009-01-22

Also, are you talking about the insurance for the military spouse? Because SGLI should cover the servicemember, unless they are field grade officer or above.

And if we're talking veterans VGLI works almost as well.

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Maybe slightly off topic, but one of the things I do with couples (this is for non-estate planning life insurance purposes only - IOW income replacement), is have a serious and honest discussion with them about "what would you do if YOU died" and point to the husband, then to the wife, and then to both of them.  Since they have usually never ponered this, I talk them through the options.  They think 500K is enough.  I tell them "OK, YOU have a 150K a year job", how is 500K going to replace that?  "Well, we would pay off our morgtage...and our credit cards.....and our cars....and our student loans....".  Well, OK, so that leaves, hmmmm, about 50K in your pocket.  You're a stay at home mom with 2 kids under 10.  Are you going to go back to work and make 60K a year?  NO?  Really?  Because that 3000Sq ft house costs something to run.  As does the food, the clothes for Johny and Jane, the piano lessons, little league, the 32 birthay parties they go to each year, the private tutor you have for Jane.  And oh crap, what about college?  Don't worry, that will only be about 200K for both of them.  But hey, at least you have the mortgage paid off.  
 
By now, they are starting to get it.  They have built a 250K lifestyle on a 150K income, and now that 150K income is gone.
 
On to the wife.  So what do YOU do (pointing to the husband) if she dies?  Who watches the kids?  Yeah, your boss will understand for a few months.  Then it's back to the grind, 11 hour days, business trips to Phoenix and Chicago, 7:30am meetings with the boss's bosses.  Man, I hope Johnny and Jane never get sick.  Or have a dance recital.  Or have soccer practice.  Or have teacher conferences.  Or have to do homework before bed.  Or want to eat breakfast at 8:00 before the bus comes at 8:30 (oh crap, that 7:30am meeting!!).  How's that working out for you?  A full time nanny or babysitter might be nice.  Or maybe a less taxing job.  Oh, scientists don't get "less taxing jobs making 150K a year at age 36?"  Wow.  That stinks.  Hmmmm.  Scratch my chin.  "what to do, what to do."
 
So now they understand why the wife needs life insurance.  This is real sh!t.  A good acquaintance of ours in town just lost her 36 year-old husband.  Freak accident (I'm not joking about this).  They have 3 kids under 10.  Now she has to go back to work.  It's not as extreme as the scenario above, but they are going to be seriously stretched.  For life.  And an extra, I don't know, $100 a month would have solved all of their (financial) problems for life. 
 
Never say never.  Prepare for the worst. 

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This is something that I have done when a client says that they have enough insurance when I know that they don't.
 
Ex. John makes $100,000 and has $500,000 of life insurance and thinks that his family would be just fine on that amount of money.  
 
Me: "John, if I gave you $500,000 and in exchange you could never earn another dime would you accept the money?"
John: "No.  It's not enough.  I'll run out of money."
 
More often, I'll just run them through a little exercise.
Me: "Ok, you have $500,000 and you think that will be enough.  It might be, but let's take a look to be sure.   Since this money needs to last, Sally will need to invest it.  What sort of rate of return do you think that she'll get?" (They'll either give a low number or if they give something high, I'll explain how they can really only safely withdraw about 4% of the money.)
John: "Maybe 3-4%"
Me: "Let's look at 4%.  $500,000/ 4%/12 months = $1,666/month.  Would your family live in the way that you would like with $1,666/month.
John: "No way"
Me: "Fortunately, it shouldn't be very expensive to get the insurance coverage that you need."
John: "ok"

voltmoie's picture
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anonymous wrote:This is something that I have done when a client says that they have enough insurance when I know that they don't.
 
Ex. John makes $100,000 and has $500,000 of life insurance and thinks that his family would be just fine on that amount of money.  
 
Me: "John, if I gave you $500,000 and in exchange you could never earn another dime would you accept the money?"
John: "No.  It's not enough.  I'll run out of money."
 
More often, I'll just run them through a little exercise.
Me: "Ok, you have $500,000 and you think that will be enough.  It might be, but let's take a look to be sure.   Since this money needs to last, Sally will need to invest it.  What sort of rate of return do you think that she'll get?" (They'll either give a low number or if they give something high, I'll explain how they can really only safely withdraw about 4% of the money.)
John: "Maybe 3-4%"
Me: "Let's look at 4%.  $500,000/ 4%/12 months = $1,666/month.  Would your family live in the way that you would like with $1,666/month.
John: "No way"
Me: "Fortunately, it shouldn't be very expensive to get the insurance coverage that you need."
John: "ok"
 
Does that extra insurance that they'll probably never use cover them when they get to retirement and have not saved enough to travel to see those 2-3 kids and their grandchildren? j/k
 
I think insurance guys will always look at the risk and investment guys will always look at the reward.  I try to be both but probably under insure most people in most insurance guys minds. I go 10x take home pay and invest the rest.  Perhaps my perspective will change when I have some clients die.

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voltmoie wrote:Every insurance guy I've ever met has a horror story of the perfect non-insurance storm.  Problem is they are all living to tell it and so are their clients...
 
I know insurance guys that will scare people about the market and economy to the point that the person buys a huge cash-value LI policy and then they put the rest of their money in fixed annuities.  They will often have people cash out their 401k (if they're still working there) and take the hit to buy LI and fixed annuities with the money as well.  I think there was someone here that was doing that for a while, his name escapes me though, Bobby it might have been.

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30 day war = No work all insurance what if's is

Anyone at least sold a decent policy this week?

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voltmoie wrote:anonymous wrote:This is something that I have done when a client says that they have enough insurance when I know that they don't.
 
Ex. John makes $100,000 and has $500,000 of life insurance and thinks that his family would be just fine on that amount of money.  
 
Me: "John, if I gave you $500,000 and in exchange you could never earn another dime would you accept the money?"
John: "No.  It's not enough.  I'll run out of money."
 
More often, I'll just run them through a little exercise.
Me: "Ok, you have $500,000 and you think that will be enough.  It might be, but let's take a look to be sure.   Since this money needs to last, Sally will need to invest it.  What sort of rate of return do you think that she'll get?" (They'll either give a low number or if they give something high, I'll explain how they can really only safely withdraw about 4% of the money.)
John: "Maybe 3-4%"
Me: "Let's look at 4%.  $500,000/ 4%/12 months = $1,666/month.  Would your family live in the way that you would like with $1,666/month.
John: "No way"
Me: "Fortunately, it shouldn't be very expensive to get the insurance coverage that you need."
John: "ok"
 
Does that extra insurance that they'll probably never use cover them when they get to retirement and have not saved enough to travel to see those 2-3 kids and their grandchildren? j/k
 
I think insurance guys will always look at the risk and investment guys will always look at the reward.  I try to be both but probably under insure most people in most insurance guys minds. I go 10x take home pay and invest the rest.  Perhaps my perspective will change when I have some clients die.

 
This kind of anti-insurance argument is so very silly.  If the client in the above example is 30 and we increase his insurance from $500,000 to $1,500,000 by having him purchase a 10 year level $1,000,000 term policy, we have raised his insurance premium by $20/month.   Is $20/month going to stop him from traveling and doing other things when he's older?  Of course not.  In fact, he's not going to invest less simply because he has added $20 more to his monthly expenses.
 
Why are you having people purchase 10x their take home pay?  Do your job and find out what your client wants to accomplish.  Most want their families to maintain their standard of living.   6x take home pay typically won't do this. 
 
Ex. John is 30 and is making $100,000.  He is married with 2 young kids.  He takes home $60,000 and is contributing $6000 to his 401(k) and his employer is putting away $3,000. 
 
You have him buy a $600,000 20 year term policy for $270.  If he dies today, his wife gets $600,000.  Let's assume that John blows $1,000/month on himself.   That would put the families need at $4,000/month instead of $5,000, but then they have added health insurance costs and $750/month is no longer being put away pre-tax for retirement.   Anyway, how is $600,000 going to be enough to give the family $60,000 of after tax money?
 
Instead of coming up with arguments of why this might be enough, first look at what would happen if they bought 10x gross income instead of 10x net.  They would buy $1,000,000 of coverage.  The premium would be $400 instead of $270.   Why take the chance for a lousy $11/month difference.   It's not as if because the insurance is $11/month more expensive, your client is going to change his roth contribution from $5000 down to $4870.  Instead what will happen is that it will get eaten up in his budget.  At the end of the year, his checking account balance will be $7,354.19 instead of $7,484.19.
 
Trying to save a few dollars on insurance premiums is penny wise and pound foolish.
 

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BerkshireBull wrote:voltmoie wrote:Every insurance guy I've ever met has a horror story of the perfect non-insurance storm.  Problem is they are all living to tell it and so are their clients...
 
I know insurance guys that will scare people about the market and economy to the point that the person buys a huge cash-value LI policy and then they put the rest of their money in fixed annuities.  They will often have people cash out their 401k (if they're still working there) and take the hit to buy LI and fixed annuities with the money as well.  I think there was someone here that was doing that for a while, his name escapes me though, Bobby it might have been.

You know some slime balls.   I've never seen anybody cash out their 401(k) early to put the money into a life insurance policy.  I've got to call B.S. on this one.

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voltmoie wrote:anonymous wrote:This is something that I have done when a client says that they have enough insurance when I know that they don't.
 
Ex. John makes $100,000 and has $500,000 of life insurance and thinks that his family would be just fine on that amount of money.  
 
Me: "John, if I gave you $500,000 and in exchange you could never earn another dime would you accept the money?"
John: "No.  It's not enough.  I'll run out of money."
 
More often, I'll just run them through a little exercise.
Me: "Ok, you have $500,000 and you think that will be enough.  It might be, but let's take a look to be sure.   Since this money needs to last, Sally will need to invest it.  What sort of rate of return do you think that she'll get?" (They'll either give a low number or if they give something high, I'll explain how they can really only safely withdraw about 4% of the money.)
John: "Maybe 3-4%"
Me: "Let's look at 4%.  $500,000/ 4%/12 months = $1,666/month.  Would your family live in the way that you would like with $1,666/month.
John: "No way"
Me: "Fortunately, it shouldn't be very expensive to get the insurance coverage that you need."
John: "ok"
 
Does that extra insurance that they'll probably never use cover them when they get to retirement and have not saved enough to travel to see those 2-3 kids and their grandchildren? j/k
 
I think insurance guys will always look at the risk and investment guys will always look at the reward.  I try to be both but probably under insure most people in most insurance guys minds. I go 10x take home pay and invest the rest.  Perhaps my perspective will change when I have some clients die.
 
You're wrong Volt.  Our job is not to make people wealthy...it's to protect their wealth.  Yes, part of protecting wealth is growing it.  But if spending a hundred or two hundred a month is going to prevent someone from retiring, then they have other problems.  Besides, it's all relative...the more money you earn, the more coverage you need, so the more you can afford to buy.  Don't be penny wise and pound foolish, and try to wring every last dime of growth out of your assets.  10X isn't bad (not quite enough, but...), but I would look at 10X gross income, since much of the net difference goes to 401K contributions, health care, disability insurance, life insurance, etc. (unless you are simply talking net of taxes but gross of voluntary deductions).

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I sell insurance, see the value, and find it an easy sell.  Use net of taxes, it's a fair number for most of the people I've sold insurance.  If my clients die will they be better off than they would have been if I had not knocked on their door, yes.  If they don't die will they be better off as well, hopefully.  I can live with myself and they can sleep better at night. Win/Win for both of us.  I'll save the castle and moat building for more affluent clients.and look here B24 .. I'll bore my clients rich, ok? 

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I hear you, voltmoie.  I just don't understand with insurance pricing being what it is why you wouldn't have them buy slightly more when there is a huge upside to doing this if they die prematurely and no downside if they live a long happy life. 
 
Because of the combination of breakpoints and policy fees, getting incrementally more insurance does not cost incrementally more in premium dollars.
 
Do you ever give your client a choice?  "Mr. Client, I think you need at least $600,000 of coverage.  It will cost $270.  If you want to play it safe for your family and get $1,000,000 for your family, it will cost $130 for the extra $400,000 of coverage.  Would you prefer $270 fo $600,000 or $400 for $1,000,000."
 
I think that what you'll find is that most of your clients would actually want more coverage if they knew the price differential.  This seems like material information that should be disclosed to them. 

Moraen's picture
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voltmoie wrote: and look here B24 .. I'll bore my clients rich, ok? 

Nice!

BerkshireBull's picture
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Ok Anon,
 
I'm going to be in the market to increase my life coverage when I get married in January.  I have a UL I bought 3yrs ago when I got into the business and was thinking about picking up a Pac Life VUL after I get married.  I will look into your WL idea though.  What product would you suggest?

anonymous's picture
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BerkshireBull wrote:Ok Anon,
 
I'm going to be in the market to increase my life coverage when I get married in January.  I have a UL I bought 3yrs ago when I got into the business and was thinking about picking up a Pac Life VUL after I get married.  I will look into your WL idea though.  What product would you suggest?

 
Are you asking me a serious question or are you busting on me? 

BerkshireBull's picture
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anonymous wrote:BerkshireBull wrote:Ok Anon,
 
I'm going to be in the market to increase my life coverage when I get married in January.  I have a UL I bought 3yrs ago when I got into the business and was thinking about picking up a Pac Life VUL after I get married.  I will look into your WL idea though.  What product would you suggest?

 
Are you asking me a serious question or are you busting on me? 

 
I'm not patronizing you.  Give me a WL recommendation and I'll take a serious look at it.  Maybe I'll buy it, and if I like it enough I'll even show it to clients down the road.  You seem to be unbiased among the companies you represent that's why I asked your opinion.  I wouldn't be asking a NML guy, for example, to tell me which WL he thinks is best as I can already guess what his automatic answer would be.

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You'll be fine with any of the big 4.  I don't know what will perform the best.  I would rather have a product that does not have direct recognition. 
 
I wouldn't recommend WL to you since I know nothing about you.  My recommendation would be to buy as much convertible term as you can get and to not wait until you get married.  If you are sleeping with your woman, you should assume that she is pregnant today.
 
As for the VUL idea, let me rip that to shreads.  Actually, you should rip that to shreads.  Take a look at the prospectus and an actual contract. 
 
You need to dig through both because the prospectus will conveniently not include the inflated insurance charges. 
 
What you will find is that you have grossly overpriced insurance combined with grossly overpriced investments combined with the fact if the policy ever lapses all gains are income and not capital gains.   For instance, every dollar that goes into the policy is subject to a 6.95% sales charge with no break points.  Have you ever had a client make an investment that charged that type of sales charge?
 
My experience has been that people who sell VUL policies don't understand the expenses.

voltmoie's picture
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30 Day War:  Week 1 RecapRepeat Contacts: 120New Contacts: 27 (need 6 contacts sat.)New Accounts: 3Appointments next week: 5It was a good week but not great - fell a bit short on most metrics.  However from the activity side it was an improvement.  I continue to struggle in getting as many new contacts as I'd like but made progress this week over prior weeks. Of the new contacts I made I feel at least 4 will do business with me in the near future and have money to invest now. Setting goals for the month helped my focus quite a bit and I plan to put up even stronger numbers next week. Also got alot of lingering administrative crap out of the way, I am awful at keeping up with that crap.  On track to do 7.5k gross for the month if the ACATs go smoothly - should pick up additional business along the way to help increase this.  I know that sucks for you vets.

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$7.5 gross(if you end up averaging that) isn't as terrible as you think(i mean it is at a wire, but not in your first year).. There are guys at my b/d who can't do that..

voltmoie's picture
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I've got a number of checks on the way and have discussed with the clients how we'll invest those funds when they get here.  Also have a few insurance policies from the previous month that will hit this month. They should total 7.5k gross, already a third of the way there.I'm not even thinking about August sales numbers now - the month is over, everything I'm doing appointments wise is for September + October.  If I pick up some bond or stock sales, great, it will push me higher.  Anything in mutual funds outside of what I know is coming will go into C shares or advisory solutions.Trying to use this "war" to put more into my pipeline make it more sustainable. Not sure if this is the right way to make it in this business so any feedback is appreciated.

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You really seem to be annuitizing your business. What family do you favor in C shares and account in Advisory Solutions? How do you pitch it to clients? Just the easier sale of low fees? Wasn't it you that told us you kept swiping accounts from another guy at ML or something that put all his clients in C shares? Just wondering what the pros and cons are as I too want to build my business this way.

voltmoie's picture
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fa09 wrote:You really seem to be annuitizing your business. What family do you favor in C shares and account in Advisory Solutions? How do you pitch it to clients? Just the easier sale of low fees? Wasn't it you that told us you kept swiping accounts from another guy at ML or something that put all his clients in C shares? Just wondering what the pros and cons are as I too want to build my business this way.My goal year one is to have $1000 per month NET in annuitized business monthly starting month 13. With C shares I don't favor a family.  I've created 5 models of C shares tried to choose the best funds I can find.  With A shares I've been using Franklin and like their products.  Please understand I'm new though and will probably adjust my process 100000 times in the next year so it's a bit pointless to share yet.  Just know how to create trust and sell is all - my "investment experience" is limited so I keep things simple and try to do what is right. One example - Guy has a 42k rollover and my month is plugging away okay I'm much more likely to push him into C shares knowing when he pops 50k I can move him into AS. I sell the C shares based on being flexible with no upfront sales charge.  -- If I was not having a good month it would be super hard to do this though, I don't want to starve.

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This has been a very interesting read. Google is my friend as I do not know most of the terms and abbreviations that you guys throw around, but it definitely has gotten my attention, and I can't wait to find out if I'll end up working in this field. Thanks, everyone.

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voltmoie wrote:

fa09 wrote:You really seem to be annuitizing your business. What family do you favor in C shares and account in Advisory Solutions? How do you pitch it to clients? Just the easier sale of low fees? Wasn't it you that told us you kept swiping accounts from another guy at ML or something that put all his clients in C shares? Just wondering what the pros and cons are as I too want to build my business this way.My goal year one is to have $1000 per month NET in annuitized business monthly starting month 13. With C shares I don't favor a family.  I've created 5 models of C shares tried to choose the best funds I can find.  With A shares I've been using Franklin and like their products.  Please understand I'm new though and will probably adjust my process 100000 times in the next year so it's a bit pointless to share yet.  Just know how to create trust and sell is all - my "investment experience" is limited so I keep things simple and try to do what is right. One example - Guy has a 42k rollover and my month is plugging away okay I'm much more likely to push him into C shares knowing when he pops 50k I can move him into AS. I sell the C shares based on being flexible with no upfront sales charge.  -- If I was not having a good month it would be super hard to do this though, I don't want to starve.

This is why I thought it was ingenious to go work for Jones when they came out with advisory solutions. You have that salary for a year - I would have been putting EVERYBODY into advisory solutions (if they met the minimum).

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