Click Here to Print This Bulletin
Update News for June 2008
Here is a quick run-down on what you will find in this bulletin:
These topics will be dealt with in more detail throughout this bulletin.
A significant amount of time was used in May to address some bugs that turned up in the stand alone forms retrieval software. These have been turning up as we have been producing stand alone versions for companies - which are FREE for any company that has provided their forms to Compulife.
Insurance Squared, one of Compulife's authorized web providers, has been implementing the new on-line forms retrieval software for their customers. Sometime in June, agents and agencies that use Insurance Squared for plug in term quotes for their web site will be able to add forms to their web sites.
Here's GOOD news for Insurance Squared customers: Existing and new Insurance Squared customers, using the on-line term quote plug-in (powered by Compulife) will be able to add forms to their sites for no additional charge until December 31st of this year. So if you want forms with your term quotes, you can get them for FREE during 2008.
After December 31st, Insurance Squared plans to charge $120 per year (that's only $10 per month) for this forms service. The form service is only available to those Insurance Squared customers who are using the plug-in term quotes for $179 per year. Forms retrieval is NOT a stand-alone option.
Subscribers to Compulife, who purchase the Internet engine directly ($995 per year in addition to our PC software of $299 per year), can have the forms technology for their web sites for FREE.
Once again, Compulife will supply the .PHP code to operate the forms retrieval software on your web site and there is NO ADDITIONAL CHARGE for that software. It is important to realize that agencies who are purchasing the Internet engine for $995, and who want to have forms on their web sites, must also place the actual forms on their web site. You will not be able to retrieve forms from Compulife's servers, the forms MUST BE ON YOUR SERVER. Having said that, it is a relatively easy thing to keep up-to-date because you can use Compulife's PC based forms retrieval software to check for new forms. You can call Bob Barney at (888) 798-3488 and he can explain it further.
Our work to add Critical Illness price comparisons for our Canadian customers got delayed by a couple of weeks due to the work required to introduce 4 new ROP categories for our U.S. software. The categories are:
The categories were necessary with the AIG Life's introduction of ROP Select-A-Term. This product, much like their non-ROP version, offers a wide number of different initial level periods to select from. They are 15, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35.
The standard categories of 15, 20, 25 and 30 appear in our existing categories. The balance of the level periods are now found in the "Other Return of Premium" category.
We have also gone to the time and trouble of cherry picking premium rates for the various level categories, and built those premiums into our level to 65, 70 and 75 variations. As with the non-ROP products, a person age 42 can have a level to 65 premium by selecting a 23 year level ROP term plan. Our software automatically does that when you choose the level to 65 ROP category. If you choose the level to 70 ROP category, then a 28 year level ROP premium is quoted. And if you select the level to 75 ROP category, you will get a 33 year level ROP premium.
We think the level to 65, 70 and 75 with ROP options are actually a great idea. They allow an insurance buyer to select a term plan that will provide them with life insurance coverage until they retire (we call it "term to retire" or "term to retirement"), and when they no longer need the insurance, because they will no longer be working, they can get all the premiums returned. And under current tax rules, the premium refund is tax free.
In fact AIG seems to be now latching onto this "term to retire" concept and we hope it spreads like wildfire in the industry. There is no reason that life insurance companies cannot build level to 65, 70 and 75 term products.
Generally the objection we hear is that companies just can't provide longer level term periods due to reserve problems. While that may be true for older clients, that is NOT true for younger clients. We admit that if you introduce a 35 or 40 year term product, the maximum issue age is less than it would be for a 30 year term product. But in order to get to age 75, a person buying a 40 year policy is only 35 when they buy it. And if a company says they can't price a 40 year term product for a 35 year old, our question is how is it that Motorist Life Insurance is able to offer 40 year term to consumers who are 45 (40 if they are smokers)?
Once again, there is no technical reason why companies can't create and price level to 65, 70 and 75 products. If there is ANY objection to doing so, it's because they don't like those term concepts biting into their whole life sales. In that regard companies need to realize there is an entire constituency of term sellers who would not sell whole life if their lives depended on it. By offering level to 65, 70 and 75 products companies give that group of agents a product which, for younger buyers, still generates a decent premium and commission for the agent, while giving the consumer a product that covers them for the period of time that they will need most of their life insurance. And by adding an ROP option, companies can increase the premium and still have an attractive term product for agents and their customers.
This is not a "can" problem, this is a "will" problem. Compulife is challenging companies to do something that benefits agents and consumers. And the sooner companies get on board, the sooner they will benefit from the sales of these products.
Compulife is again turning its attention to making some changes that we need to accommodate our Canadian subscribers.
Critical Illness (CI) insurance has become a fairly popular product line in Canada and we have now come up with a design that will allow CI comparisons to be added to our software. Comparing Critical Illness insurance is not as simple as life insurance and so you can read more about it by visiting the Canadian monthly bulletins for May and June:
Last month I said I would be curious to hear what U.S. subscribers think of Critical Illness insurance and I received emails from 3 agents/agencies. This was the most thoughtful and reasoned reply.
Wanted to send you a few comments/views on CI. I agree with you 100% that insurance is for financial loss, should not be a lottery ticket etc. That being said, I think you are seeing CI wrong. Certainly there can be the situations, were a person has a mild CI and hardly skips a beat. But that is not what I see or have seen be the majority of situations.
The issue is, modern medicine is allowing us to survive many of the things that used to trigger our Life insurance. We died, the life insurance solved the financial burden our death created. But what handles the financial burden caused by survival? The indirect costs of a CI illness such as cancer has been documented by the American Cancer Society to be 65% of the financial burden on a cancer survivor. Indirect meaning not covered by health insurance etc and may not even be a direct cost of treatment, but a by product. DI is certainly part of the answer, along with health insurance. BUT, and we are a big DI shop, it is not enough. DI at best is replacing 65% of income and once at the 150k income level there is a reverse discrimination that occurs as the carriers max issue amount heads towards 50% of current income. Now, that is just trying to maintain, think about adding new bills associated with the CI. A family with 2 or 3 young kids. Mom is stay at home and Dad works. Mom gets Breast cancer and has to undergo 1, 2, 3 months or treatment. Dad's DI does not help. Who takes care of the kids? Where does Dad want to be, at work or at his wife's side as she undergoes chemo or radiation etc. What happens if the cancer hospital you want to be treated at is not on the list for your Medical plan? What happens if you want alternative treatment in or outside of the country? What if you have to travel to a hospital 2, 3, 5 states away for treatment. The treatment might be covered by your medical plan, but travel, room and board are not going to be, and you most likely will want to support of a loved one going with you. Think you get my point, can go on and on with situations.
Where I see this product's value: is a companion product with both DI and High deductible Medical plans. Can fund the elimination period for the DI plan and cover both the high deductible and uncovered costs you incur. It also is a supplement when you either can not get anymore DI or can not get any at all due to your occupation or income. I am constantly working DI cases for self-employed that make a great living and support a nice life style, but their tax return indicates they make very little. It is that very little income reported on the tax return that the DI companies consider, leaving the client very under insured in the real world. Had a very affluent Dentist that could not get DI due to ongoing treatment for mental/nervous. She continued to see a psychiatrist 1 time a month and had for a few years. No meds, no serious mental diagnosis, but as she pointed out, it works, it makes me feel better, why would I stop? Got CI issued for her.
If you really want an insight into the need for CI, I would recommend another POC in Ken Smith with Assurity Life. I believe Assurity currently has the best CI product in the U.S. market place. There are several that are very good, AIG, Mutual of Omaha, and several others. But, Ken Smith is the Director of DI & CI at Assurity. He is a really nice guy and has been involved for many years. In fact, he came to Assurity from Mutual of Omaha where he was the CI guy there. 800-276-7619 ext 4409.
Now, has CI taken the U.S. market by storm - no. Basically it was introduced in to the US market in its present day form in 1999. I see it starting to take hold. I work with several financial planners as their DI shop, and more and more they are insisting their clients have this coverage. They see that even with DI, should the client have a serious CI, it could completely destroy the client's financial security.
I have attached 3 items I thought you might find interesting. The 1st is a short and simple approach letter concerning CI. I included it as it very simply states the need for CI in my opinion. The other 2 items are the high lights sheets for Assurity's 2 CI plans. As you will see, modern day CI is not just a cancer and Heart attack plan.
So, obviously I see a value in CI, and the reason is I truly believe everything I have mentioned above. I have been touch by critical illness from seeing close friends have to go thru it and yes an extra 50k or 100K would have made a big difference in their recovery and the years of indebtedness they faced after recovery. Not all CI's will cause a serious financial burden, but most will.
I am excited for the work you are doing on the CI Comparisons and think it will help to get more and more producers educated on the product (or at least asking about it). If the producers do not know about it, the consumer never will either.
Not sure how far you want to go on this discussion, each area I touched on can be expanded upon significantly. But rather than send you a book, just wanted to touch on a few things and, for what it is worth, share my opinion.
GFSC Inc dba The Chittendens
The Plus Group
Here is what I originally wrote to which Dale responded:
In my mind insurance is used to replace a financial loss caused by a named risk. If you die your dependents lose your paycheck and so you buy life insurance to give those dependents the money that is then used to replace the income that they lost because you died. You buy house insurance to replace your home if it burns down or is blown apart by a tornado.
Financial loss may or may not be triggered by a critical illness. If a heart attack is covered by the policy, and you have a heart attack, then the policy pays a lump sum (congratulations, you're a winner). My point and question is, "What was the financial loss that was caused by the heart attack?" Many people have a heart attack and are back to work in a week or two while others are disabled and unable to work. But being able to work is not a determining factor in whether you collect a large lump sum from a CI policy, it pays the owner that money regardless of whether there was financial loss. If you are paying premiums in order to receive money when there has been no loss, the concept is much more like gambling than insurance.
It seems to me that if you are concerned about loss of income because of disability arising from an illness, then you really need disability insurance. Disability insurance covers a much broader range of risks and is much more focussed on replacing an income lost due to ANY accident or illness, not just a list of predetermined illnesses. And if you have disability insurance why would you then need a lump sum if the illness happens to be one of the ones named in the CI policy? For example, if you have enough real life insurance, why would you need or want accidental death insurance?
It seems to me that buying insurance should not go beyond covering financial loss caused by a catastrophic event. Sure you could use your money to buy a policy that covers you for cancer or heart attack, but is that really a good use of your money? As I said before, I see the need for an insurance policy to pay me the value of my house if it is wrecked by a tornado. The question is, do I need a policy to pay me the value of my house because a tornado came close?
I should note that I replied to Dale and I received another email from him, but I would like to see what other people have to say. At this point it does NOT appear there is any serious demand for CI, based upon the lack of interest I have seen from subscribers. Once again, I only received a total of 3 emails. Feel free to email your comments to me at barneyrl@compulife.
If you want more information on the progress of our Canadian changes, you can read the Canadian monthly bulletin here: