Annuities for People That Can't Qualify for Life Insurance

KyleLancaster · 10-22-2009, 07:19 PM

Greetings everyone,

I am a life insurance agent working for an impaired risk brokerage. Until a few months ago we had a product we could offer to just about anyone regardless of health; but such as life, all good things must come to an end. We were left in the situation of now having a void in the coverage we can offer to people with cancer under the age of 40.

For the past few weeks we have been searching high and low for a product to offer but to no avail. I have had several clients, who were willing to pay anything to get at least some type of coverage, that I had to turn away and refer to pre-needs counselling.

I had an epiphany last night. Why turn away a client so they can prepay funeral expenses when there should be annuities that would work. The problem I have run into now is that I know annuities like many people know the inner workings of the federal tax code. I have just a strong enough grasp on the material to be dangerous.

My question to you, the gods of the FPDFA, where do I begin with this product offerring? What exists out there for short accumulation periods on smaller type annuity contracts?

I was researching enhanced annuities, but it seems like not much of that is or can be done in the US.

Thanks in advance for all the input.

scagnt83 · 10-22-2009, 09:53 PM

There are VAs that will lock in the death benefit at the highest accumulation point in a specific period, so even if the market tanks you still have a good size death benefit left.
I have heard of some annuities that have an enhanced DB, but im not familiar with them, nor could I direct you to which companies might offer them. All I know is that they are not companies that I do business with....at least on a regular basis. But I would be surprised if there wasnt some kind of simple health questionaire for those products.

Basically you cant get a lot for just a little. Even if you lumpsumed 500K into a product, no company in their right mind would give a DB of more than 550K or 600K max to a cancer patient...especially if they are terminal.

Companies who insure normally "uninsurable" people, do so with exorbanate premiums if they are to stay afloat....and even then its a hard business model to make work....believe me, I have run the numbers before!! Im not saying that its not a needed or wanted thing, but giving a large DB compared to premium (anything to make the product worthwhile) to people with life threatening diseases, is a business whos margin can be eaten up very quickly by a few actuarial miscalculations. Thats why these companies or products are few and far between.

What product or company was it you where using before?

TristanTLC · 10-22-2009, 10:08 PM

You could research selling the client a GI product. They don't care if you have cancer, that's why it's GI.

KyleLancaster · 10-22-2009, 11:06 PM

We run an online brokerage, GI generally requires that you meet face to face with the client.

If you know of a GI policy that doesn't, I am all ears. We have a void that seems to keep growing as the months pass since the old Forethought policy was discontinued.

TristanTLC · 10-23-2009, 12:04 AM

Originally Posted by KyleLancaster

We run an online brokerage, GI generally requires that you meet face to face with the client.

If you know of a GI policy that doesn't, I am all ears. We have a void that seems to keep growing as the months pass since the old Forethought policy was discontinued.

I have a "mock GI" that can applied online. It has some catches

1) You can't ever have been diagnosed with HIV/AIDS
2) It's a small group policy (minimum of 3 lives) and max face is 20K for the GI.
3) The 3 people have to have a work relationship (can be 1099 or W2) but you don't have to provide proof of employment. It works great for Real Estate and other professions that are 1099 but want a group policy.
4) You must be employed AND working average min 30 hours per week. (again, can be 1099 employment)

You've heard of decreasing term? Our policy is Increasing Whole Life. The face value increases 3% each year with no rate increase. It can be applied online

Rates for 20K will vary based on age, but is usually around $30-40/month
WARNING: Commission Sucks, but you can't expect much from a product this cheap and it's a GI.

It can be applied online and is targeted at business owners wishing to provide FE as a benefit through their job.

HarryRenard · 10-24-2009, 11:47 PM

That is definatley an option but you must be aware of the penalties and then tax consequesnces for those under 591/2, I believe you mentioned the market was under 40. But its up to you to educate them of what can and will happend and let them decide. Good luck

Newby · 10-25-2009, 01:15 AM

A couple of options for you might be NGL or the ForeThought Select product.