We plan to post the October 2003 Internet monthly update to our five monthly update websites on Thursday, September 25th.
The October 2003 disk update will be processed Thursday, September 25th and Friday, September 26th.
Disks will be shipped Friday, September 26th. You should have the October Update in your office by Tuesday, September 30th. Unless you have made arrangements to purchase your diskettes, please return your August disks ONLY AFTER you have successfully installed this September 2003 Update. August disks are your backup in case you should have problems installing the September edition.
IMPORTANT NOTE: Subscribers who are receiving disks can save up to $80 per year by switching to updates by Internet. Please read the last part of this bulletin for full details. Don't wait for your next subscription invoice to make the change. Compulife will bonus your subscription renewal deadline for switching from disks to internet.
VERY IMPORTANT NOTE: For disk update subscribers renewing after January 1, 2004 the annual subscription price for receiving monthly updates by disk will be $20 per year higher. Prices for internet updates will be unchanged, and will be $100 per year less.
The number of companies in the Compulife comparison program fell below 150 this month. With the receipt of A.M. Best's 2003 "Key Rating Guide", and a careful review of the rating information for 2003, we were able to identify a small number of companies no longer doing business.
Given that mergers and acquisitions continue (at one time we quoted over 180 companies) we think that those who like to advertise how many companies are in their term database should change to the conservative claim that says "over 140" NOT "over 150".
Compulife subscribers will discover that we have added two new types of comparison categories this month. We hope the new categories will make it much easier for you to identify the two different groups of products that we have been quoting in our software for some time, but which will now be much easier to locate and compare.
A number of companies now offer a Return of Premium rider to their term policies. The basic concept is that at the end of the level premium period, if the insured is still alive and wishes to cancel their policy, the company will refund all basic premiums paid (including the ROP rider but not other riders such as Waiver Premium, etc.).
In order to be included in the ROP category, a company's product must fit that simplest of basic criteria.
However, we caution subscribers that not all Return of Premium products are the same and that you need to investigate product features beyond simply price. For example, some products offer interim/partial ROP options while others do not. No such information will be included in our system and so you must do your homework on the different plans.
We should also note that we have encountered at least one company with an ROP premium calculation that we cannot currently replicate. The company uses a table of different multiplication factors based upon age, which when multiplied by the total premium give the total ROP premium. We are not yet able to do that type of calculation and unless we discover that a number of other companies use that same method we will not attempt to replicate that methodology in our software. If it turns out to be a common trend we will address it.
Therefore, the products currently included in our database are those which are based upon a "rate per thousand" multiplied by the face amount together with a policy fee.
If there are Return of Premium products that we are not currently quoting which you would like to see added, please contact us with that information.
ROP categories initially exist for 15, 20 and 30 year term. 5, 10 and 25 year categories can be added later if such ROP products materialize.
ROP categories will NOT be included in our internet engine for consumers. It is our view that this is a significantly more complicated type of life insurance and we believe it should be quoted and explained by an agent.
We are particularly concerned that consumers get the mistaken impression that they can cancel these products at ANY time and get their premiums back. Of course this is NOT the case, but you as an agent need to take steps to ensure that this is not assumed by your client. We understand that these products are becoming popular with clients quite quickly, but deeply suspect that consumers are not being properly informed about the limitations attached to these products. For this reason we are also introducing a "Return of Premium Analysis" tool which will be found in either the "Income from Capital Analysis" or "Retirement Investment Analysis" menu options.
"Term4Sale - Agent Edition" customers will not have ROP categories in their version of our software and they will not have the new "Return of Premium Analysis". This is because the categories will not be at the term4sale website. It should be noted that the ROP products are still in the regular term database for Term4Sale - Agent Edition customers, there just won't be a category to break them out specifically. If a "Term4Sale - Agent Edition" customer wishes to upgrade to the full Compulife, they can do so for a pro-rated difference in cost. For full details please contact our office at (800) 798-3488.
A number of companies offer U/L plans with no lapse premiums which are guaranteed for various periods, some to age 100. Products with guarantees longer than 30 years have been traditionally placed into the "Other Term" category of Compulife.
Until now, in order to isolate U/L plans with premiums guaranteed to age 100, you had to do an accumulated premium comparison to age 100. However, with the increase in the number of these products and with the number of subscribers who didn't seem to realize that they were even in our software, we decided that while adding the ROP category we would also add a new category for products with guaranteed level premiums to age 100 (or longer).
Some of these policies do have premiums that go beyond 100, some terminate at 100 and some are paid-up at 100. Compulife will not have information about such issues and so you will need to do your homework on each of these products. As in the case of ROP, the cheapest product will NOT necessarily be the best and for that reason such products will NOT be quoted at the term4sale.com website. A product will be included in this comparison provided the product offers a guaranteed level premium to age 100.
Compulife Lite and Term4Sale - Agent Edition customers will not have this category in their version of the software because the "other term" category has never been available in those editions of Compulife. If a "Term4Sale - Agent Edition" or Compulife Lite customer wants to upgrade to the full Compulife, they can do so for a pro-rated difference in cost. For full details please contact our office at (800) 798-3488.
In addition to the above mentioned category changes that we have made, a new analysis feature has been added that will help you to determine the "rate of return" which the ROP rider is providing to the consumer. More important, this new analysis tool permits you to print a two page report that will assist your client in understanding how an ROP rider works. Even more important, this report will alert your client to some of the limitations associated with the ROP concept.
As we noted earlier, we are doing this because we are concerned that there are problems that may arise from the marketing of these products. It is our hope that the Return of Premium option will be better understood by agents and their customers through the use of this new analysis tool. Here is an example of a "Return of Premium Analysis" report based upon a 45 year old male preferred plus non-smoker for $500,000 using Americom's Patriot Select 30:
The purpose of this calculation is to demonstrate the effective "rate of return" or the "interest rate" that you would have to earn in order to duplicate the benefits provided by the Return of Premium rider offered in the level term insurance policy.
The assumption made by this analysis is that you have two options:
1. Purchase a basic level term policy which provides no Return of Premiums if you cancel the policy.
2. Pay more in order to obtain a Return of Premium rider which will refund premiums at the end of the initial level period.
Premium including Return of Premium Rider : $1,650.00 ** Basic policy Premium : $1,295.00 -------------- Difference in annual cost for 30 years : $ 355.00
Return of Premium in 30 Years : $49,500.00 **
To determine the effective rate of return we assume that the $355.00 per year is placed into an alternative investment with the objective of generating $49,500 **. In order to do that, the alternative investment would need to provide you with a 8.67% annually compounded rate of return. The following will show the year by year results which confirm the rate of return. Year Age Actual Deposit Total Value of Investment
1 45 355.00 385.80 2 46 355.00 805.06 3 47 355.00 1,260.69 4 48 355.00 1,755.85 5 49 355.00 2,293.97 6 50 355.00 2,878.76 7 51 355.00 3,514.29 8 52 355.00 4,204.94 9 53 355.00 4,955.51 10 54 355.00 5,771.19 11 55 355.00 6,657.63 12 56 355.00 7,620.97 13 57 355.00 8,667.87 14 58 355.00 9,805.60 15 59 355.00 11,042.02 16 60 355.00 12,385.69 17 61 355.00 13,845.93 18 62 355.00 15,432.85 19 63 355.00 17,157.43 20 64 355.00 19,031.61 21 65 355.00 21,068.37 22 66 355.00 23,281.82 23 67 355.00 25,687.29 24 68 355.00 28,301.43 25 69 355.00 31,142.34 26 70 355.00 34,229.69 27 71 355.00 37,584.88 28 72 355.00 41,231.11 29 73 355.00 45,193.66 30 74 355.00 49,499.95
IMPORTANT NOTE: THIS IS NOT AN ILLUSTRATION OF INSURANCE POLICY VALUES.
The above values are ONLY a GUIDE to show how the theoretical alternative investment would perform if you invested the difference in premium cost at the assumed rate of return.
When examining a Return of Premium option there are other issues which you need to explore. For example:
1. If you die part way through the level payment period your beneficiary will receive the death benefit but what happens to the additional money that you were paying for the Return of Premium rider? ** Many policies pay nothing additional on death despite the fact that you paid extra money for the rider. If that is the case you would have been further ahead with the basic policy.
2. If you quit the policy before the end of the level period, there may be NO return of premium whatsoever. Some policies offer interim Return of Premium values; others do not. **
3. Taxation. Part or all of the amount of your Return of Premium MAY BE tax-free. If so, in order to replicate a tax-free result outside the Return of Premium policy you would need an "after tax" rate of return of 8.67%. In order to achieve this, you would need an even higher "before tax" rate of return. The amount of that return would be based upon your personal income tax rate and the type of alternative investment selected.
** It is highly recommended that you obtain a company generated Return of Premium policy illustration in order to confirm the values that are in your Return of Premium policy.
During September we will be adding a "file" option that will allow you to send an individual product's premium information into the "Return of Premium Analysis". This option will appear on "file" option which appears in the top left corner of the "Display single product" window. The second choice on the menu will be "File to Return of Premium Analysis".
If the product that you have selected is an ROP premium product, that premium information will be sent to the ROP side of the analysis/calculation process. If the product in the window is NOT an ROP premium product, the information will be sent to the non-ROP side of the calculation. The ability to file the information will eliminate the need to manually enter values, although manual entry will still be an option and allow you to enter premiums and/or values not quoted by Compulife.
The refile option for Pick 12 has been enhanced allowing two optional ways for the program to choose products for your client. The second option is the default method which is the method that has been used up to this point. That option permits you to change the client information and when the program re-files to Pick 12 select the best class of premium available based upon the new client information that was entered.
However, this creates a problem for those who wanted to show multiple classes of the same product. For example, assume that you wanted a spreadsheet showing the preferred plus, preferred and standard non- smoking premiums for the very same product. If you changed the face amount, but left the client set to preferred plus, and then wanted to refile, the program automatically put in the preferred plus rates for each product entry because the program assume that you wanted preferred plus as the rate class.
The new option, which appears as the first option in the "Refile Options" window, will permit you to refile so that the exact same premium class for each product is maintained in the Pick 12.
It should be noted that there will be a further enhancement to the refile option that is not yet functional. If you use the Health Analyzer, the program will re-file the least expensive premium rate class for the product, which is available based upon the health criteria that you entered.
To go with that coming option will be a "Health Class Report" which will explain what classes were rejected by the program and the reasons why they were rejected. If the health criteria for that product was not provided by the company, the system will still pick the lowest premium available for the class selected. The health analysis report will indicate that health analysis was not performed for that company/product.
Within the "List or Modify Product Database" option is an option called "Select a Group of Companies to Quote". This allow you to select a smaller group of companies to quote than what is provided by Compulife. If you select a group of 10 companies, and then decided that you temporarily want to quote all companies or see other companies, you previously had to go back to the "Select a Group of Companies to Quote", turn on all or those companies you wanted to see, do your work and then go back to once again select the 10 companies that you wanted.
We have now added a new option to the "Display Product Comparison" which allows you to "Quote All Companies" at the click of a button. When you click on "Quote All Companies" your comparison will re-display with all the companies included. Until you change that back, or until you leave and re-enter the program, the "Quote All Companies" selection will be remembered. Once you do leave the program and then return, the selected group of companies will be activated again.
Some users are connected to the Internet by a network server and they access the internet using what is referred to as a "proxy setting". The option to use the proxy server has now been added to "options" on the Red Master Menu. Please DO NOT USE this option unless you know what you are doing.
Parade Magazine is the weekend magazine insert for a number of paper throughout the United States. We were called in August to be advised that a story on personal finance would appear in the September 7th edition of the magazine, and a reference to www.term4sale.com would be included. You might want to check that out.
Please remember that each subscriber to Compulife is entitled to one free listing at the www.term4sale.com web site.
IMPORTANT NOTE: You are NOT automatically listed at the site. You must request your listing.
We do not assume all subscribers want to be listed because we know that there are those who do not want to be listed, for a variety of reasons. Therefore, please check to make sure you have a listing if you want to be listed.
At some point we plan to add some testimonial letters at our www.compulife.com web site where you can see the favorable experiences a number of our subscribers have had by being listed. While no one is inundated with telephone calls, a consumer calling a Compulife subscriber is generally a pretty good insurance prospect. Some agents have called to say they have sold sizable policies.
On July 1st Compulife cancelled its referral program which allows an agent to receive 6 free months of Compulife by referring a new customer.
Compulife's new advertising campaign will focuses on paying a prospective customer $5 just to TRY our software. Full details are now available at our website www.compulife.com.
It is clear already that this marketing concept is a winner. A number of agents have already acted to claim their $5 and a number of those have taken advantage of the 25% discount and purchased our software. This despite this offer is only appearing in our September print ads.
Increasing the number of Compulife subscribers is good for all subscribers. It gives Compulife additional revenue to initiate product improvements more quickly, and permits us to control our individual pricing.
In July we introduced a new version of our program which offers a number of the new options that we had been promising. With that completed we are now moving forward with implementation of our multi- life quotes for up to 5 people.
Progress on that improvements was slowed by the introduction of new comparison categories for our U.S. subscribers. With that completed, work again will re-focus on the 5 life comparison.
Some companies permit a discount for husband and wife when they buy policies at the same time, while others do it also for business partners. Many that allow the discount for business partners will allow the discount for more than 2 partners and so the multi-life comparison button for non-spouse will eventually ask how many clients to do the comparison for and give the total premiums for that group. You will be able to file that group of 2, 3, 4 or 5 individuals into the Pick 12.
Once this function is completed our multi-life option will be wrapped.
For those who update by Internet, Compulife has gone to great lengths to provide you with redundancy in our websites. Our main website is:
However, we keep another completely separate website, on a completely different server, in a completely different country, at:
Whatever we update to compulife.com, we also update to compulife.us or compulife.cc. If one website goes down, for whatever reason, the other is ready to serve you. That includes both monthly and mid-month updates.
For those doing monthly updates by Internet, we rely on three other websites to supply monthly updates. These are automatically checked and used by our automatic Internet update software.
For those not wanting to return disks there are two ways to eliminate the problem.
1. Switch to obtaining monthly updates by Internet.
Not only will you eliminate the expense and hassle of returning disks, you will save $80 per year in subscription fees.
To switch to Internet monthly updates, go to our webpage www.compulife.com and select the last menu choice "Forms, applications, instruction tutorials, etc." Under the section "License Agreements", the third license is the "Internet Update Endorsement". Print the endorsement. Once you have it, please read it carefully, especially the part where you agree that you have successfully downloaded and processed our "mid-month updates". If you haven't done that before, call us and we'll be happy to take you through the procedure. It's easy.
2. Disk Purchase Program
The other way to avoid returning the disks and the disk box each month is to pre-purchase them for $21 per year ($1.75 per month). Once you do that you can keep them for future reference, throw them away or return them for a credit (once each year) when you are invoiced for the following year. $21 costs you less than mailing back disks each month.