David Wexler recently appeared on a nationally broadcasted webinar, hosted by the Association of Advanced Life Underwriting (AALU), a national advocacy organization dedicated to serve the needs of life insurance community. During this webinar, David was joined by Mark Teitelbaum, the current chairmen of AALU’s Wealth Transfer Committee and Justin Brown, the Vice President of Legislative Affairs at the AALU. Together, they analyzed the potential effects of tax reform and estate tax repeal on insurance advisors and their clients. In addition, the panel shared their recent experience with clients and others professional advisors about their responses to proposed changes by the new Administration.
Estate Planning and Life Insurance
A good estate plan is like a three legged stool. Each leg is constructed and positioned in such a way to give the stool stability and function. The three legs of any estate plan are the dispositional plan, the tax plan and the liquidity plan. This is true irrespective of the size of the estate.
The dispositional plan documents who gets what and when and who makes a decision when you cannot. The tax plan engages strategies and documents that can reduce any estate tax exposure through discounts, appreciation shifting or charitable planning. The liquidity plan directs how resources will be used to provide survivor income to families, finance education for children and grandchildren, pay off debts, finance Federal and State Estate taxes, provide for charitable dispositions, and fund the succession of an interest in a business.
The development of a liquidity plan involves the assessment of the objectives for all of the above, an examination of the resources and techniques that will finance these objectives and then determine any surplus or deficit. If a deficit is discovered, it can be made up with life insurance. The art of using life insurance as part of the liquidity plan is determining the right amount, determining the right duration and determining the right ownership and beneficiary arrangement. Further, if the right ownership and beneficiary arrangements are funded by annual or lifetime gifts and the gifts are insufficient to fund the life insurance needed for the liquidity plan, additional creativity will be warranted to find the resources to fund the fund the liquidity plan.
The hallmark of a good estate plan is the stability it creates for the family and other survivors combined with the resources to accomplish its function. A liquidity plan deficit that is financed with life insurance is often the best resource to create the liquidity needed and balance the estate plan, no matter the size of the estate.
Breast Cancer and Life Insurance
October is Breast Cancer Awareness Month, which is an annual campaign to increase awareness of the disease. It’s a great reminder to encourage people to take the steps needed to detect cancer in its earliest stages. Every October, many breast cancer charities try their best to bring attention to the disease and raise funds for future research.
You can work to prevent breast cancer by getting regular screenings, but also by making some lifestyle changes. These changes include watching your weight, eating vegetables, watching your alcohol intake, and also knowing your family history. However, breast cancer can affect anyone, male or female, and it’s helpful that there are so many resources and medical advances available.
A history of breast cancer doesn’t make getting life insurance impossible. Many companies are able to offer life insurance to those who are just a few years from recovery. The main factors to consider when determining if a cancer survivor is insurable for life insurance is the stage/grade of the cancer, the date of diagnosis and recovery, and the type of treatment. When underwriting a life insurance policy for any female, it is great to see that routine mammograms have been completed.
Join the fight against breast cancer and help raise awareness and encourage regular check-ups to help reduce the risk of cancer. Also, know that life insurance can be very affordable for breast cancer survivors!
Life Insurance Embraces Pink
As we transition away from September, we are graciously welcomed by the color pink. Everywhere you turn in October you will be reminded of the many women (and even men) who have courageously battled with breast cancer. This month isn’t about professional athletes showing their feminine side with pink patches on their jerseys but to bring awareness and support to a disease that will affect 1 in every 8 women. October embodies the color pink as its identity for Breast Cancer Awareness Month, not because it is synonymous with females, but because the true essence of the color brings a sense of comfort, warmth and hope that everything will be okay. And now there is new hope for breast cancer survivors when applying for a life insurance policy.
Not too long ago, breast cancer survivors had little-to-no hope of acquiring life insurance, even after undergoing successful treatment and remaining cancer-free for years. But with the overwhelming awareness and support for research over the past decade, the rate of survival has dramatically increased. This is BIG news for life insurance underwriters who are basing policy approvals/denials on the likelihood of post-treatment survival. Due to the increasing survival rate, the underwriting process for breast cancer survivors has dramatically changed, allowing survivors obtain to policies if they meet certain guidelines. Below is a list of the new standard questions:
- What type of breast cancer?
- When you were diagnosed?
- What stage were you in?
- How big was the tumor?
- Were lymph nodes involved
- Did it metastasize?
- What type of treatment did you receive?
- How long since treatment?
- When did you start/finish treatment?
- Was there any recurrence?
- Are you on medications, what kind?
The likelihood for acceptance and the policy rate issued relies heavily on the answers to these questions. Those survivors who were diagnosed early with no lymph nodes affected and received treatments have an almost guaranteed standard rate approval. The more mature and involved the cancer becomes, the tougher the requirements become. However, the longer the period of time one waits to apply for life insurance – postpone period – after successfully completing treatment, the better odds you have of qualifying for a standard rate.
It is worth mentioning that as research and survival rates continue to grow, some life insurance companies are now beginning to offer some breast cancer survivors standard rates, without the flat extra fee. This flat extra fee is common for cancer survivors and is an additional premium that can decrease and disappear over time, so long as the client remains cancer-free. The Good News: the upward trend in breast cancer survival is allowing companies to do away with this flat extra fee for those who had stage 0 or 1 with no lymph node involvement. This flat extra fee will most likely appear for those who had more advance staged breast cancer, but will similarly diminish over time.
Therefore, best rule of thumb is to stay up to date on your check-ups, seek a doctor for any concerns, and live a healthy, smoke-free lifestyle. The sooner any cancer is found, the better the chances are for survival as well the ability to obtain a good life insurance policy once recovered. Mammograms: good for your health, good for your life insurance rates!
Life Insurance Done 8 Ways
Big changes take place during the month of September. The weather becomes crisper, days become shorter, kids are heading back to school and there is pumpkin flavored everything! September is recognized as the end of summer and welcoming of fall. But there is another persona September takes on that many may not be aware of, national Life Insurance Awareness Month.
This month is dedicated to bringing attention to life insurance for the many American’s that are still without coverage. Today, 4 in 10 American’s do not own a life insurance policy, with many excuses boiling down to lack of knowledge. In fact, the most common reason for not having a policy is cost. American’s believe buying life insurance is too expensive when in reality it can cost as little as $13 a month, depending on the policy. That is why Life Insurance Awareness Month is aiming at disproving these myths and providing the proper education to Americans so their families are financially covered in the event of a tragedy.
Even celebrities are jumping on board for Life Insurance Awareness Month, with TV star/comedian, Anthony Anderson, as the 2015 spokesperson. He opens up about how life insurance was a huge part of his family’s life growing up.
Life insurance is all too often over looked. Fancy iPhones and daily lattes seem to be more important than protecting the financial well-being of your family; mainly because people are not educated on the subject matter. With the help of Life Happens, the non-profit organization promoting Life Insurance Awareness Month, more American’s can learn and benefit from even the simplest of coverage. Take a few moments to check out LifeHappens.org and spread the word on life insurance.
If you have any questions regarding a current or potential life insurance policy, please call Keith Eig, at 301-656-0660 ext.306 or email at kmeig@gwellc.com.
Digital Archiving Enters New Realms
Purchasing life insurance policies, drafting a will or an estate plan and securing your family’s financial well-being in the event you pass are some of the smartest things you can do. Nobody likes confronting the harsh truth that we won’t always be around to provide for our loved ones, but it is a fate you can protect against with proper planning and guidance. But what about everything else? Account numbers and passwords to pay bills, the deed to the house, keys to the safe deposit box, or the actual will itself, if these items cannot be located it makes life for your loved ones a little more challenging after you’re gone.
Everplans, a start-up company co-founded by Abby Schneiderman, has developed a digital archiving system to safeguard against these overlooked details. Everything from contact information for the gardener, to directions on how to care for pets, to treasured family recipes passed down for generations, all this “mundane” information, that seems to slip through the cracks when planning for life-after-death of a loved one, is gathered and stored in an online archive. Not to forget about all of the important materials, which are stored in the archives as well, such as copies of your will, health derivatives, beneficiaries and power of attorney. The client decides the amount and type of date collected so it can be as abundant or scarce as they wish.
The whole idea behind this product is making pertinent information readily accessible to the client, advisor and eventually deputy – the person you designate access to your archive – once you pass. It puts everything in one organized place, eliminating the stress and run around.
For a more comprehensive understanding of the product and the need for it, visit CNBC.
GWE 14th Anniversary!
On July 1st, there were a number of noteworthy events that occurred throughout history, including; the Battle of Gettysburg (1863), Canada declares its independence (1863), The Battle of San Juan Hill (1898), the first Sony Walkman goes on sale (1979), the PG-13 movie rating debuts (1984), and the return of Hong Kong back to China (1997). But another significant event took place on July 1st, 2001, when Scott Greenberg and David Wexler founded Greenberg, Wexler and Associates with two employees and one “associates.” Today, with Keith Eig added to the partnership roster, GWE has three partners, four associates, six phenomenal employees and three strategic partnerships. Our goal of providing objective advice, independent carrier representation, and extraordinary service has made us one of the top insurance brokerage firms in the country. We’d like to thank all of our clients and advisors who have helped us on our remarkable journey. We look forward to continuing to providing exceptional service and advice for many more years to come.
Have you reviewed your policy beneficiary recently?
On March 15, 2015, a New Jersey higher court ruled on a life insurance beneficiary case, Evanisa S. Fox v. Lincoln Financial Group and Mary Ellen Scarphone, in favor of the defendant based on lack of compliance to properly change the beneficiary of the insurer’s policy.
Evanisa, a Brazilian native, married Michael in July 2012 and shortly after he filed for both an I-30 petition for US citizen sponsorship and I-864 Affidavit for support agreeing to support her 125% above the poverty level. What Michael ignorantly neglected to do was change his life insurance beneficiary from his sister, Mary Ellen Scarphone, to his wife. As any drama would unfold, Michael unexpectedly died in a work-related accident a few months after he married Evanisa but just shy of her receiving US citizenship. Prior to Michael’s death, he failed to submit a change of beneficiary form to Lincoln Financial (his provider) or take any sufficient action to name Evanisa as his new beneficiary.
Both Evanisa and Mary Ellen applied for Michael’s life insurance proceeds and since he never changed the beneficiary, his sister, Mary Ellen, was rightfully awarded the policy claim. Evanisa filed a case against Mary Ellen and Lincoln Financial, stating she had rights to his life insurance policy urging courts to adopt a “bright-line” rule. She claimed that her marriage to Michael created a presumptive right to his life insurance benefits, just as a divorce would revoke those rights. Evanisa was ignoring the fact that life insurance policies are not as easily shared as they are discontinued. Only under very limited circumstances would a designated beneficiary, in this case his sister, be denied proceeds and granted to another. There are some states that do allow a “substantial compliance” in changing beneficiaries, meaning even though the insurer did not complete the process to change beneficiaries, they made every reasonable effort to do so.
Two criteria must be met to be considered substantially compliant:
- a clear expression of the insured’s intention to change beneficiaries
- a concrete attempt by the insured to carry out his intention as far as was reasonably in his power, i.e., undertaking positive action which is for all practical purposes similar to the action required by the change of beneficiary provisions of the policy.
- a. Verbal intent to change is NOT valid!
In this case, Michael did not meet either of those criteria; therefore, Mary Ellen was the lawful recipient of his life insurance policy.
In her final attempt, Evanisa tried to defend her case by using the I-30 and I-864 Forms as evidence to Michael supporting her and justifying the life insurance inheritance. This also did not hold up in court because the I-864 Affidavit for Support explicitly states at the time of application that the support is terminated if death occurs. Therefore, when Michael died, his estate was no longer responsible for supporting Evanisa.
This case is a reminder to continuously review and update your policies in compliance to your insurance company’s specified procedures. Marriage and divorce are two major events in a client’s life that unquestionably facilitate a policy review. Not to forget about the annual reviews that should occur at your policy anniversary date. Accordingly, agents have a due care obligation to inform and remind clients about beneficiary rules and other policy requirements. It is imperative to not become lazy with your policies, always telling yourself you’ll get around to it. If changes in your policy are desired, act now! Be sure to follow all procedures and compliance, first and foremost, putting it in writing. Contact your agent and get the ball rolling before it’s too late.
If you have a policy with us and are unsure about who your beneficiary is or just have questions regarding the process, give us a call. 301-656-0660.
Life Insurance Regulation Focus
With the life insurance drama of the mid-1980’s to early-1990s, where many policyholders were falling victim of life insurance companies insolvencies, many regulations were put into action to counter these issues and make sure the insurance companies upheld their contractual obligations with their clients. Today, the life insurance industry is highly regulated; making sure their number one priority is on protecting the public from any potential insolvencies.
There are 7 main regulations that life insurance companies must adhere to:
- Conservative Reserves
- Conservative Capital
- High Quality General Accounting Assets
- Cash Flow/Liquidity Testing
- Restrictions Between Insurance Subsidiaries and Parent Holding Companies
- Insurance Company Financial Statement Reviews
- Mandated Annual CPA Audits and Periodic State Examinations
To learn more, read M Financials detailed summary here.
AALU Annual Meeting
The Association of Advanced Life Underwriters – AALU – Annual Meeting was back in town this past week and all three partners, Scott Greenberg, David Wexler, and Keith Eig, were in attendance along with many other life insurance professionals from the M Financial Group community, including president, Fred Jonske.
This year’s agenda was filled with top keynote speakers, including Futurist Dr. Peter Diamandis kicking off on Sunday. Other speakers included Apple co-founder Steve Wozniak; Barbara Corcoran of television’s Shark Tank; Jason Dorsey, The Gen Y Guy; Governor Mitt Romney, former Presidential Candidate and Massachusetts Governor, and comedian/television actor Bill Engvall. There were also many informative Professional Development workshops and numerous opportunities to connect and network with other AALU members and meeting attendees.
AALU was founded in 1957 and has flourished into a lobbying, education, and networking resource for the nation’s top life insurance producers. Their mission is to promote, preserve, and protect advanced life insurance planning for members, their clients, the industry, and the general public. With over 2,200 insurance professionals as members, the annual meeting is seen as the premiere learning, networking, and advocacy event in the life insurance community.