There’s still two more months to go and by any measure the life insurance industry has made strides in both underwriting and product design that speak well for the future, but especially should be an eye opener right now. I’ve tried to note each change or solidification of a change as it happens, but let’s just look at things that are going to make this year stand out.
I mean it when I say open your eyes right now. There is a product opportunity that is almost literally here today and gone tomorrow and if you don’t act on your real life insurance needs now, well, we can all think back to something we should have purchased when it was at “that price”. With no lapse guarantee universal life, simply the best permanent product on the market, it’s been a few years that the signs and the warnings have been out there that it is just too under priced to last forever, which is exactly what it needs to do. We knew the price increase had to be coming and it’s here. The National Association of Insurance Commissioners has announced that at the beginning of the year, 1/1/2013, all companies will have to bring their no lapse guarantee UL reserves into compliance with AG38. They are going to have to increase their reserves on new sales so that the long term guarantees are clearly sufficient.
Let me real clear about this. If you own a no lapse guarantee UL or if you put one into force before companies make their price changes they are bound by contract to live with the guarantees they have issued. They cannot, for any reason, go back and raise the price on in force policies. Unlike health or long term care insurance they don’t leave themselves the out of saying that they can only raise prices if they raise the price for everyone who has that product. So, not to belabor this, but a significant opportunity exists for those who need small or large permanent policies, estate second to die life insurance, or need to replace a failing traditional UL that has outlived its’ guarantees and is imploding. You have a very small window to shove that application through. Some companies have already set application deadlines that are well before the end of the year. Others have simply decided to get out of the UL business and have set a deadline for acquiring their products before they do.
Just fyi! My opinion is that this is a good thing. The product, while more expensive, will still be the best permanent product on the market and needs to ensure its’ long term viability. In other words, if you miss this chance to buy it at current pricing you will simply be able to buy a great product at a higher price.
Type 1 diabetes!! It’s almost like underwriters went back to school on this subject. Where there have been declines in the past we are seeing more and more reasonable life insurance approvals. Are they giving away the farm? Of course not. They are, after all, underwriters. But. like prostate cancer, breast cancer and melanoma, underwriters are starting to embrace what it means for someone to have not just won the battle, but the war. While type one diabetes is still a road full of potential obstacles, like we’ve been able to do with bipolar disorder, there is definition, a map if you will, to what it takes to get approved as a type 1 diabetic. Compliance and control are the key, but the number of clients we’ve had approved this year with type 1 diabetes is clearly good news for the future.
Bottom line. Call it clinical underwriting? Call it underwriting catching up with medical gains? Call it good news. This has been the best year I’ve seen in a long time for those who have run into life insurance brick walls in the past. If you have had a bad experience or had an agent give up on you after one try, call or email me directly. My name is Ed Hinerman. Let’s talk about it.