RATE HIKES: IS YOUR ADVISOR SLEEPING ON THE JOB?

Is this the start of a bad trend? September is the official Life Insurance Awareness Month with ambassador Lamar Odom. October is the unofficial jack-up-the-rates month. This also happened last year.

Scope

Premium rates for guaranteed life insurance products, which already have increased by 8%-10% this year [2011], recently have been boosted by up to 12% by some insurers. Another wave of premium hikes is expected to hit next spring [2012].
— Investment Executive, Sep 23, 2011

Life insurance premiums are going up again for permanent plans with level insurance rates which are typically guaranteed for life. The reasons are the same as last year plus a desire to increase ROIs. According to industry watcher, Byren Innes “any publicly traded carrier will jump at a chance to pad its margins”. External factors make ideal scapegoats.

Once again, the instigator is Manulife.  The new rates take effect at 5:01 PM on October 14, 2011.

On average, the level COI [Cost Of Insurance] rate increases are as follows [at Manulife]: 9% on InnoVision; 12% on Security UL; and 7% on Limited Pay UL. The largest increase is among clients aged 35 to 45, with an increase of 20% to 25%.”
— Advisor.ca, Sep 23, 2011

Once again, other companies will likely copy.

Dilemma

At times like these, the behaviour of salespeople is fascinating to watch because of the conflict they face. Commissions are based on the premiums you pay. As rates increase, total commission dollars usually do too.

That's makes smokers lucrative prospects. They know they must pay more than nonsmokers. They know they may not get approved. If they have a genuine need for insurance, they want to buy. Price is less important.

Act Now?

If you're a prospect for new coverage, your advisor is probably pushing you to buy now before the increases. Even if you're considering a company which has not announced rate hikes, do you want to risk paying more next week?

Insurance is considered sold, not bought: more supply than demand. To motivate you to buy, salespeople like enticing strategies which make insurance look like a no-lose, too-good-to-be-true deal. Here are the top five strategies . The problem is that there's no real urgency for you to act. A price hike might be, when coupled with the usual closing techniques.

If you're being sold an appealing strategy when you don’t have a clear need for insurance, higher rates hurt. Your salesperson has motives to push you to buy now.

Wait?

If you are already a client and have no imminent plans to buy more insurance, you may get ignored. It's more lucrative for your advisor to close new sales.

An Exception

What if you are planning to convert term life insurance to permanent coverage? You'll be stuck with the higher rates while your salesperson gets rewarded with more commission dollars. There's no incentive for him or her to spend time with you now.

Here, you benefit by calling your advisor. Just be wary of attempts to top up your coverage unless you need more.

Your Best Course

If you need more permanent life insurance, buying before the newest round of rate hikes will save you money. Also, new products may be worse in less visible ways such as weaker guarantees.

Case study: Coke Classic deviated from the original recipe by replacing expensive pure sugar with cheaper high-fructose corn syrup. You probably can't taste the difference but you're not getting "the real thing". If the population gets super-sized too, that's a nice side benefit. Bigger people can consume even more.

Insurance policies can take a couple of months to get approved. Your premiums are generally based on the date you apply, rather than when you get accepted. You can’t lose by acting now.

Did You Know?

If you're getting proper after-sales service, you'll already know about the upcoming rate hikes, even if they don't affect you. A newsletter or email is quick and cheap to send.

Links

• Three reasons life insurance prices are shooting up (Oct 2010) [podcast 90]
• Why life insurance premiums are rising (Moneyville.ca, Aug 2011)
• Life premiums: on the increase (Investment Executive, Sep 23, 2011)
• UL commissions on the block (Advisor.ca, Sep 23, 2011)
• Universal Life: level cost still rising (Insurance Journal, May 2011)
• Tax planning: The top five insured strategies
• Why after-sales service stinks
• RIP: What happens if your insurance advisor dies? (new)
• image courtesy of Pikajane Poketaku (US)

Podcast 136 (5:41)

direct download | Internet Archive page | iTunes

PS Not all rates are increasing but that doesn’t mean any are going down …

LIFE LESSONS FROM A 50 YEAR OLD

Last month, Dad turned 75. This week, I'm 50 and finally feel I understand my purpose in life.

So much has happened since 1961. Man landed on the moon. The Berlin Wall fell. Compact discs replaced vinyl records and cassette tapes. Computers became personal and affordable. Air conditioning changed from a luxury to a necessity. GPS navigation reduced arguments on family road trips. Phones became mobile and smart. What a wonderful, wonderful, wonderful time to be alive.

The greatest marvel is the Internet, which was born in 1957. We now have instant access to nearly anything and anyone from almost anywhere. Often free. What a liberator!

Childhood

As a child, I had a lingering fear of nuclear war between the Americans and Russians. What if annihilation started by accident? We’d be just as dead. I wasn't terrified to the point of losing sleep but I was concerned. The 1985 song Russians by Sting was reassuring but I wish I heard it in the 1960s. If you were born after the fall of the Berlin Wall, you may not understand the Cold War era and might be more worried about terrorism.

Overall, childhood was great. I walked to school and played with friends outdoors. We didn't worry about knives or guns at school but we played with toy weapons. I read the Hardy Boy mysteries. My favourite TV show was the police drama Hawaii-Five-O which aired Friday nights at 10 PM. I was in agony when the schedule briefly changed to Thursdays because there was no way my parents would let me stay up that late with school the next day.

There were so many marvels. Life kept getting better. I excelled at my studies and looked forward to a rosy future despite the rocky economy.

Family

Someone who'll help me see things in a different light.
All the things I detest I will almost like
--- Depeche Mode, Somebody (1984) 

I grew up in London, Ontario where my parents gave me an excellent foundation. I didn't want to live alone but didn't know if I'd ever find someone who could understand me. Sharmila did. We've been married since 1988. Having an anchor and companion makes life rewarding.

Our son, Jeevan, was born in 1994. Parenthood brings challenges but mostly rewards. He goes to university next year and might leave home for the first time. That would be an emotional experience.

40 in Sept 2001

Turning 40 is meant to be a milestone. My birthday was mere days after 9/11 and the end of innocence. I didn't feel like celebrating during that numbing time.

I was focused on my career since life at home was running smoothly. For security, I especially wanted skills which were

• portable: useful in other companies (e.g., communication, management, leadership)
• complementary: not overlapping what others did

That's still a great strategy.

I was Actuary, Individual Insurance at National Life, insurer for the wealthy. I reported to the company's sole Senior Vice President, Rene Trudeau. I also had dotted line responsibilities to General Manager, Individual Division, Prem Agrawal. Both listened to me and helped me grow. They reported to the President, Vince Tonna. I had considerable leeway, 10 staff, and a corner office (a childhood dream) with an excellent view towards Queen's Park.

The Wrong Wall

My boss was going to retire and I figured I'd get a portion of his role, a company car (another childhood dream), and live happily ever after.

In 2004, the parent company started dismantling my company. My 10 staff were gone and I was reporting to an assistant vice president in Quebec City.

What a boot to the head!

To paraphrase Stephen Covey, I was climbing the ladder of success only to find it leaning on the wrong building. I realized there was no security in the corporate world. Your future depends on the whims of upper management and investors. How do you build a solid future on a shaky foundation?

Security comes from bringing in revenue. I switched to helping top advisors with advanced marketing until I got booted out in November 2009. By then I built the skills to help you directly.

50 CANDLES

Turning 50 is a big but pleasant transition. I now feel I understand why I'm here on this planet.

The corporate world teaches well but stifles change. Even if you make the decisions, you face compromises in quality and timelines. The advisor world is disappointing because of the conflict between what's right and what's lucrative. That leads problems in deciding who you can trust. Among the wealthy — the best served segment — 33% lack confidence in their advisors. That creates a tremendous opportunity.

Since childhood, I've wondered how I could make the world better in my own small lost-in-the-rounding way. I knew I had more to offer but didn't access to the right tools.

New Tools

Nowadays, we can do so much with so little. We don't need to own factories, maintain web servers, rent offices or hire permanent staff. What do you need beyond what you already have: your computer, your mobile phone and Internet access?

That's so empowering. With social media, we can even beat much larger organizations because we can make personal connections with real people. The gap between thinking and doing is minuscule. What we don't know, we can learn online just-in-time or outsource.

I’ve written assorted posts about careers to help you see the immense possibilities if you seize opportunity. You don’t need talent or permission. You need to start and keep going. If you need a boot to the head, read Linchpin by Seth Godin with an open mind.

Next 50 years

There are no free rides.No one said it'd be easy.
The old man told me this, my son.I'm telling it to you.
— John Mellencamp, Minutes to Memories (1985)

I've seen too many people — especially in the corporate world — who start coasting when they reach their 50s (sometimes earlier). They feel entitled to slow down. They aren't embarrassed to say their smartphone is "too hard" to learn. These sages know what won't work because they've "seen it all before". They look rolly polly and drink a little too much (when on an expense account). They need help with the same things month after month. They're wary of LinkedIn and still don't understand Twitter. They start dying little by little, piece by piece.

I plan to keep doing what I’m doing: learning, caring and sharing. You’re invited to the party.

Links

• Your digital tapestry
• 9/11 and the end of innocence
• Who can you trust? | FBI and Sick Kids
• You (yes you) are a genius: The Linchpin Session
• Unemployed: How to make your exit easier on you
• The talent myth-conception

Podcast 135 (9:02)

direct download | Internet Archive page | iTunes

PS When's your next milestone birthday?

9/11 AND THE END OF INNOCENCE | #911plus10 #sept11

The Twin Towers were very special to me. I don’t like heights but visited the World Trade Center twice. The last time was in 1987 when I was working for Metropolitan Life. This time, I was brave enough to go to the windows and look out. You might yawn but this was a victory for me.

9/11 changed my world in a way that nothing else has. The end of innocence. The terrors that happened in other countries were now on our shores. Forever.

Today’s the 10th anniversary of 9/11. This is the first time I’m telling my story.

Where Were You?

On the morning of September 11, 2001, I was on stage in Halifax, Nova Scotia unveiling my biggest initiative ever, the SaveTax Project, which gave advisors personalized, functional websites.

Something was wrong.

I was going through my content too fast. Way too fast. Elsewhere across Canada, my audiences were smaller and carefully picked — generally 20-50 advisors. That lead to more questions. Here I was on a stage in front of 100-200 advisors. That's too many for spontaneous questions. By the time I figured this out, I didn't know how to slow down and interject questions for them.

The moderator was standing at the side. I didn't know why since I had so much time left. That affected my pacing too. I finished my 60 minute session in a record 38 minutes. The moderator then told us that a plane crashed into the World Trade Center.

My presentation no longer mattered.

Reaction

I was dazed. So was everyone else. Some were watching TV in the lobby. I went to my room and turned on my set. The newscaster was saying something about a second plane, other attacks and the shut down of airspace. I couldn't understand. That couldn’t be right. Why were they reporting this? There was talk of terrorists. Everything was getting shut down. Trains weren't running. Car rentals were blocked.

I tried calling home and got through. My wife and seven year old son were safe. They didn't know what was happening. Life seemed normal. I told them to turn on the TV and that I'd phone back once I found out how I'd get home.

How would I get back to Toronto?

Cash

I changed into my street clothes and went down to the lobby. No one knew what to do. There was more speculation about terrorists. To stop their communications, the Internet and mobile phone networks might be shut down. Was that even possible? To stop them from transferring money, the banking system might be shut down.

US flights were being redirected to Halifax. All hotel rooms were now booked. Since I hadn't checked out, I was told that I couldn't be kicked out. Several colleagues had checked but could not get their rooms back.

In a daze, I went down the street to a banking machine. I figured that I'd need cash if credit cards wouldn't be accepted. I don't know how, but I managed to insert my card into the wrong crevice. Now I had no bank card and little money. I went into the bank, which had tellers but no customers. I explained what happened. Would they believe me? They seemed numb too. Without question, they retrieved my card. I withdrew $500.

Like ET

Back at the hotel, arrangements had been made to rent two vans. This was possible because our host had a personal connection. We were going to be charged mileage. The cost was over $2,000. I don't remember if that was per vehicle or in total. It didn't matter. Capitalism thrives during crises.

I got something to eat but didn’t have much appetite. The roads were eerily quiet. We drove home with minimal stops listening to AM news radio. Sometimes we got a signal right from New York City. No one said much. We just wanted to get back to our families. For a while I was seated in the last row and not beside a door. I couldn't get out. I felt choked and claustrophobic. The rear air conditioning vent wasn't working (what you expect for $2,000?). I had trouble breathing until I calmed down. I didn’t tell anyone my predicament.

At the next break, I grabbed the front passenger seat and took turns driving. I don't know how I stayed awake and on the road. After about 20 hours of driving, we were safely home.

Epilogue

In 2002, I was in Washington DC:the SaveTax Project was nominated for an eFusion award from AM Best. There was so much security. Even getting into my hotel required a security check. Vehicles entering buildings were checked. You could no longer enter the Washington Monument with a bottle of water or pocket knife. These reactive measures felt like installing a security system after the jewels are gone: well-intentioned, expensive and ineffective.

I went to the 9/11 exhibit which had opened at Museum of American History on September 11, 2002. When I saw items from the World Trade Center that had melted from the extreme heat, I was moved. Movies show more extreme spectacles but this was real. And unreal. The exhibit brought me peace in a way I can’t explain. The next step was visiting Ground Zero in August 2009 and talking to New Yorkers who were personally affected. The final step in the cathartic process is this post.

Your Story

You'll have your own 9/11 stories. I may have some facts mixed up. Can you believe that 10 years have passed? Days turn to minutes and then distort into memories.

9/11 already feels like ancient history. It's easy to forget the powerful emotions we felt at the time. Time moves forward. Our lives get busy. Details fade. That helps us deal with tragedy.

Video Tributes

Here are two musicians with close connections to New York City.

Bruce Springsteen sang My City of Ruins weeks after 9/11. You’ll find better quality recordings but this one has a special intensity.

Both of Peter Gabriel’s daughters were in NYC on 9/11. Neither was injured but he didn’t know because he couldn’t reach them. He expressed his feelings in I Grieve.

Lest we forget.

Links

• Reasons to stop avoiding New York City
• Why we accept airport security
• Your life expectancy exceeds 1 billion seconds
• September ‘11 is LIAM with Lamar Odom
• image courtesy of Cassie Wagenknechts (US)

Podcast 134 (8:05)

direct download | Internet Archive page | iTunes

PS This weekend, life looks quite normal. A mobile phone company is shooting a commercial several houses away. Life carries on and on and on.

HOW LAMAR ODOM’S MOM SAVED HIS LIFE

A lot of people don’t think they’ll ever need life insurance, but how do you know? My mom didn’t, but look at how important her decision to buy life insurance turned out to be. — Lamar Odom

NBA fans will know of Lamar Odom (Wikipedia), but do you know how his mother saved his life with insurance?

Lamar Odom has seen seen plenty of tragedy off the basketball court. His dad, a heroin addict, left when Lamar was six. His mom was raising him alone but she died of colon cancer at 35 when he was just 12. His son died in his sleep at only 6.5 months old. His grandmother died at 80 (she raised him after his mom died). His cousin was shot and killed at 24. The SUV taking Lamar to the funeral indirectly killed a 15-year old pedestrian.

Lamar is now 31 and the ambassador for Life Insurance Awareness Month.

September ‘11

I’m sure my mom didn’t think that she’d die at 35, but that didn’t stop her from doing the responsible thing. — Lamar Odom

Lamar explains in his own words. (If the video doesn’t play, here is a direct link.)

Lamar’s mom left money and a caring grandmother. Both made a huge difference in his life.

What Type Of Coverage?

Perhaps Lamar's mom automatically got group life insurance through her employer --- one of the two types of coverage you can’t own. The death benefit is typically 1-2 times your annual salary and premiums are paid by your employer. Group life makes an excellent foundation but may not be enough.

The biggest problem is that coverage disappears when you leave your employer. Your departure may forced upon you. There's often a short window of a month to convert the group life coverage to the same amount of personal coverage without any medicals. I don't see this option exercised often. The ex-employee might not understand the value, act too slowly or be worried about paying. A new job may provide group life insurance and other benefits but there's a period with no coverage. That gap could last much longer than anticipated.

Whether Lamar’s mom was protected through work or privately, the important point is that she was protecting against the unexpected.

Parallels

If my dad didn’t have life insurance, everything would have changed for our family. We would have had to sell our home.
— Leslie Bibb, LifeHappens.org 

Do you see the parallels with Leslie Bibb's story from 2010? She was only three when her dad died and didn't realize the role that his insurance played in her family's survival.

Getting life insurance is boring and easy to delay. Lamar's mom and Leslie's dad thought otherwise. Simple planning and low cost protection saved their families.

Now's a great time to get your insurance coverage reviewed and updated. If not now, then when?

Podcast 133 (4:10)

• Life Insurance Awareness Month website (LIFE Foundation)
• Lamar's video + Behind the scenes (LifeHappens.org)
• 10 questions with Lamar Odom (LifeHappens.org)
• Lamar Odom (Wikipedia)
• Lamar Odom accident: Lakers forward no stranger to personal tragedy (Lakers blog, Jul 19, 2011)
• Laker's Lamar Odom has to deal with death all over again (LA Times, Aug 2011)
• Heavy heart: Lamar Odom's shoe (The Association, Nov 2006))
  Lamar Odom seeks tax deduction for NBA fines and fitness fees (Forbes, Nov 2010)
• Iron Man didn't save Leslie Bibb but another superhero did
• How 'Cake Boss' Buddy Valastro made bitter batter better at 17 (new)
• At age 7, Boomer Esiason learned no one is guaranteed a tomorrow (new)
• Two types of insurance you may have but can’t own
• Longevity over the last 100,000 years
• image courtesy of Bridget Samuels (Los Angeles)

direct download | Internet Archive page | iTunes

PS Don't forget about your health insurance ...