Insurance Agent Forum

[dgoldenz]

I recently wrote a health insurance policy on someone, who then asked me to take a look at his life insurance policy. Just got the fax today - annual renewable term with Mass Mutual. $400k death benefit, 45 years old, preferred non-smoker risk class, premium for this year is $237. Premium at age 60 is approximately $8,000. Premium at age 70 is approximately $24,000. Total premiums accumulated by age 75 is approximately $500,000 (for a $400k death benefit).

30 year term = $821/year x 30 years = $24,630. Good agent he's got there....

[TEXAS PITBULL]

Did you know the clients situation at the time of initial sale? Sometimes the annual renewable term is a clients ONLY option due to price. They can't afford much of anything BUT wants something instead of NOTHING. It USUALLY starts out lower than ANY other term product on the market and as long as the client KNOWS it will reset annually and increase in price each year, I don't see what's wrong w/ offering it.

Sometimes a client ONLY wants a CHEAP term policy to cover a specific loan or other entity for a couple of years and they plan on dropping the product after that. THIS PRODUCT DOES HAVE ITS PLACE IN THE MARKET IMO!

In this situation though, it sounds as if the client didn't know about the reset option.

[WinoBlues]

Originally Posted by dgoldenz

I recently wrote a health insurance policy on someone, who then asked me to take a look at his life insurance policy. Just got the fax today - annual renewable term with Mass Mutual. $400k death benefit, 45 years old, preferred non-smoker risk class, premium for this year is $237. Premium at age 60 is approximately $8,000. Premium at age 70 is approximately $24,000. Total premiums accumulated by age 75 is approximately $500,000 (for a $400k death benefit).

30 year term = $821/year x 30 years = $24,630. Good agent he's got there....

Mass Mutual Agent was probably setting up the future conversion.

[Norwayguy]

Originally Posted by WinoBlues

Mass Mutual Agent was probably setting up the future conversion.

That would be my take as well or the agent had a conversation something like this: I have a quote for life insurance for $400K of coverage can you beat this price and he said sure ART is $x per year with the understanding that this is a long term need and we will need to convert blah blah blah all the client hears is $x per year.

[dgoldenz]

Originally Posted by TEXAS PITBULL

Did you know the clients situation at the time of initial sale? Sometimes the annual renewable term is a clients ONLY option due to price. They can't afford much of anything BUT wants something instead of NOTHING. It USUALLY starts out lower than ANY other term product on the market and as long as the client KNOWS it will reset annually and increase in price each year, I don't see what's wrong w/ offering it.

Sometimes a client ONLY wants a CHEAP term policy to cover a specific loan or other entity for a couple of years and they plan on dropping the product after that. THIS PRODUCT DOES HAVE ITS PLACE IN THE MARKET IMO!

In this situation though, it sounds as if the client didn't know about the reset option.

The sale was only 2 years ago. A level 20-year term policy would have cost him about an extra $5/month at the time. The client has no idea what he has, hence the reason he asked us to take a look at it.

Originally Posted by WinoBlues

Mass Mutual Agent was probably setting up the future conversion.

I guess it's an easier conversion when your premiums are skyrocketing and you aren't presenting any other options than Mass Mutual. Okay Mr. $50k/year income....I know you were only paying $237/year when we started this thing, but let's take your ART and convert it to whole life so that you can pay $8,000/year for it. Sound good?

[Robert Barney]

I don't know what age this gentleman was when he began the ART, but here is the info on a new individual 45 for $400,000, assuming preferred but not preferred plus.

MassMutual 10 year term: $794 per year

Compare to 10 year term from:

SBLI: $356
Ohio National: $365
MetLife: $381
Cincinnati Life 10 year term: $383
Midland National: $385
Banner Life: $392

As you can see, Mass Mutual's 10 year rates are about double the competitive market, but according to what you told us, their ART is dirt cheap. So I would argue that it is really Mass Mutual (the company) that wants their agents to push ART because it is Mass Mutual that wants to be able to convert the client in the future - hoping that the client gets orphaned at some point, and they can send in someone else to try and flip the ART to whole life.

It is not an altogether bad strategy from the company's point of view, given that it is dealing with a fairly captive group of agents, and therefore a captive group of clients.

The strategy is only negative for the consumer who could have got a better term product and better price up the street.

Once again, the consumer that shops around for life insurance can save big.

[WinoBlues]

Originally Posted by dgoldenz

The sale was only 2 years ago. A level 20-year term policy would have cost him about an extra $5/month at the time. The client has no idea what he has, hence the reason he asked us to take a look at it.



I guess it's an easier conversion when your premiums are skyrocketing and you aren't presenting any other options than Mass Mutual. Okay Mr. $50k/year income....I know you were only paying $237/year when we started this thing, but let's take your ART and convert it to whole life so that you can pay $8,000/year for it. Sound good?

Did not say that it was the right thing to do, BUT, it does force the guy to do something with in a few years. In this case it forced him to shop it with you. A win for you a lose for the bad guy.
I have written a few term policies. I know that on 30 thirty year plans I am locked out of most those for at least twenty or so years before I can rewrite or convert most. On some of the early 10 and twenty year term policies we are re writing or converting several a year now. Especially on the old non guaranteed twenties like JNL's. I ~love~ conversions! Do not even have to be my clients. A lot of of orphan/abandoned term cases out there. Really like the P&C term cases. So I guess selling ten year term would be better for me in the long run and thirty year term maybe better for the client. Big ~maybe~. As long as his problem or need is over by then. Or he promises to die with in that time frame.

[Death Cab For Tootie]

I think the fact that different companies price their term policies so differently is very telling. I know I've written a lot of ART on myself and my clients who know they want to convert to WL over time. What also is important is the definition of disability for waiver of premium. With Mass Mutual, if someone is disabled they can convert to any permanent policy and MM will pay the premiums. I don't know what they other company's policy is, but other than SBLI I don't believe the companies Robert listed offer WL.

Bottom line: if the client wants cheap, I can give them cheap. If they want quality, I can give them quality. If they want a mix, I can give them a mix. It doesn't always have to be about the lowest price. If it were, everybody would drive Kia's and live in the ghetto.
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Originally Posted by dgoldenz

The sale was only 2 years ago. A level 20-year term policy would have cost him about an extra $5/month at the time. The client has no idea what he has, hence the reason he asked us to take a look at it.



I guess it's an easier conversion when your premiums are skyrocketing and you aren't presenting any other options than Mass Mutual. Okay Mr. $50k/year income....I know you were only paying $237/year when we started this thing, but let's take your ART and convert it to whole life so that you can pay $8,000/year for it. Sound good?

Unless you know what the original discussion was between the client and the agent, I would suggest laying down the stones you're throwing. For all you know, the client was on board with converting the policies over time but has forgotten. You know as well as I do clients have a very short memory some times.

[Robert Barney]

I think the vast majority of people who NEED life insurance need to buy term life insurance and that is the only type of life insurance that they will need.

Agree or disagree?

[Death Cab For Tootie]

People don't NEED to buy any life insurance, term or otherwise. People WANT to protect their family and themselves under all circumstances. So, term for some, permanent for others, a combo for a majority. This is dictated by the budget and what the client wants to accomplish.

[dgoldenz]

Originally Posted by Death Cab For Tootie

Unless you know what the original discussion was between the client and the agent, I would suggest laying down the stones you're throwing. For all you know, the client was on board with converting the policies over time but has forgotten. You know as well as I do clients have a very short memory some times.

So they should set the client up for disaster in the future by putting them on ART now just so they can get another commission on a conversion? Like you said, clients have a very short term memory. Is there any real logical reason for selling this guy an ART policy with these kind of premiums instead of a level term policy?

[Full Throttle]

All life insurance is ART insurance. I know nothing about the product you ran into, but if the product is competitive, I like ART more. With level term you are over paying on the front end to keep the premium level, however, I bet the percentage of policy holders keeping their policies until the end of the term period is very low (10%? I have no idea, it would be interesting to know the real number). ART is more honest in that you are paying the true cost each year.

Unfortanetly, my primary carriers don't have ART, so I don't sell it. I don't think selling ART in itself is unethical (just the opposite), from what you're saying its just a poor product that you ran into. Above all else, you sold the client what he wanted, the first guy didn't.

[dgoldenz]

Originally Posted by Full Throttle

All life insurance is ART insurance. I know nothing about the product you ran into, but if the product is competitive, I like ART more. With level term you are over paying on the front end to keep the premium level, however, I bet the percentage of policy holders keeping their policies until the end of the term period is very low (10%? I have no idea, it would be interesting to know the real number). ART is more honest in that you are paying the true cost each year.

Unfortanetly, my primary carriers don't have ART, so I don't sell it. I don't think selling ART in itself is unethical (just the opposite), from what you're saying its just a poor product that you ran into. Above all else, you sold the client what he wanted, the first guy didn't.

I understand that all life insurance is ART in some form. This is just it in its most basic form and the yearly increases are ridiculous. A 30-year term would cost him $821/year. His premium this year is about $450, and will grow past the $821 figure in about 3 years. He should have a 30-year term policy much longer than 3 years - whether he keeps it for 15, 20, 25, 28 years before replacing is another story. But by then on the ART, he'd be either forking out $10k/year or have dropped the policy long ago. As you said, it's just a crappy product.

[VolAgent]

MassMutual's ART is convertible for 10 years, and generally explodes between years 10-13. It just depends on the age, gender, uw class, etc. The only reason it should be sold is to be converted in just a few years, for a very short term need, or if the client is extremely cash-strapped.

MM's most competitive term products are the ART and 20 year. I doubt many of its other term products get written, just not very competitive. You can certainly argue that MM has priced the ART for conversion, but I would argue that MM would prefer the original agent convert it than let it go orphan and a new agent do so. As to why this client had an ART, no idea. It definitely sounds like the agent dropped the ball in some capacity. Either he didn't sell the right product, or he didn't follow through on the conversion conversation.

I would disagree with Robert Barney. You are correct that most people need term, but that isn't all everyone needs. Many people have a need for something permanent (I'll leave the UL vs. WL argument for another day). A minority need a place to stuff cash. Everyone needs a strategy and an ongoing relationship with their agent. Way too many agents, both captive and non-captive, sell a life policy and then forget about it.

[Franz Kafka]

MM ART is strictly a replacement for 10 yr term. It's NOT meant for any term longer than that. And yes, it is the cheapest among 10 year terms.

[WinoBlues]

Originally Posted by Robert Barney

I think the vast majority of people who NEED life insurance need to buy term life insurance and that is the only type of life insurance that they will need.

Agree or disagree?

Need??? What you ~need~ on the day you buy it is most likely going to change long before the term period ends. Will it be the only type of insurance that they will need? Yes. As long as they promise to die at the appropriate time.

I think Term insurance is a wonderful product. I have paid out millions of dollars of term to families.

I have also seen people get to the end of a term period and the premium go from $60 PAC to $800+ PAC and become an ART. On that day the permanent policy became the option they should have taken if the still need insurance.

[dgoldenz]

Originally Posted by Franz Kafka

MM ART is strictly a replacement for 10 yr term. It's NOT meant for any term longer than that. And yes, it is the cheapest among 10 year terms.

A 10-year term with SBLI for a 43 year old male, preferred risk, $400k face is $130/year. The first year premium on this policy was $237 and it went up from there to ~$1100 in year 10.

[Franz Kafka]

Originally Posted by dgoldenz

A 10-year term with SBLI for a 43 year old male, preferred risk, $400k face is $130/year. The first year premium on this policy was $237 and it went up from there to ~$1100 in year 10.

You said "premium for this year" was $237 and the first year premium was also $237 - I'm not sure which is which.

45 year old pref'd NT 10y term $400K for SBLI shows $356 - I'm not sure which quote you're looking at.

You're right. MM ART cumulative 10 yr premium is still higher. <stand corrected>

[dgoldenz]

Originally Posted by Franz Kafka

You said "premium for this year" was $237 and the first year premium was also $237 - I'm not sure which is which.

45 year old pref'd NT 10y term $400K for SBLI shows $356 - I'm not sure which quote you're looking at.

You're right. MM ART cumulative 10 yr premium is still higher. <stand corrected>

My mistake, my Compulife was set at $100k, not $400k. The $237 was the first year premium and he bought he policy at age 43, he is age 45 now. SBLI $220 at P+, $292 at preferred. He was probably a preferred plus risk at the time. Anyway, the MM ART total premium for the first 10 years is way higher than either of those numbers.

[somarco]

Years ago the big mutuals taught agents to sell ART (when they couldn't write WL) with the idea that you converted a little bit every year.