Wanna know about Life insurance rider types and differences
by Guest » Mon Dec 28, 2009 07:09 am
Someone please tell me about the different types of life insurance riders. Are all LI riders alike?
Total Comments: 42
Posted: Sat Jan 09, 2010 06:42 am Post Subject:
Hi BNTRS,
There are several possible reasons, most likely unique to each situation.
I've come across agents who don't have the the right knowledge about their products. That mostly happens when the product or service keeps on changing it's terms (or for that matter the duration of such offers).
Likewise it also happens when the agent is new to that particular industry or service. The only exception to this wherein I've come across such agents is when it seemed that the agent might be trying to push me through some thing that I don't need at all.
Over here, I just wanted to know if you have any other reasons e.g. the NML agents are not properly trained etc.
Posted: Sat Jan 09, 2010 08:15 am Post Subject:
All too often, what gets said between agents and prospects/clients is repeated from what the agent heard another agent say in a different circumstance. Like the "rumor" game one may play, little twists become incorporated into the dialogue, and soon black has transformed into white.
agents who don't have the the right knowledge about their products
That's absolutely true! When I teach my prelicensing classes, invariably, I have students come to me with life policies they were told work one way, but when I explained how those same kinds of policies worked, the students come to me and say something like, "But that's not my agent told me." And I proceed to show them everything I discussed as it appears in their contract.
(On the other hand, it could just as well be that the client heard what they wanted to hear, too, and that the agent was being accurate and said none of the things that the client "remembers.")
It is incumbent on every licensed agent to both know and accurately portray his own products. And if they are trying to replace another company's products, they have to be able to accurately explain how that product works, too. If they never take the competitor's policy away and spend 2-3 hours reading the contract, how can they, in all good conscience, remotely begin to tell the client what it does?
"He said -- she said" is a lousy position in which to be placed. If agents just studied their own products (instead of merely reiterating what someone else told them), truly knew how they worked, and could easily communicate that information to their clients, the number of consumer complaints like the one leading to this discussion would be greatly diminished.
Posted: Sun Jan 10, 2010 03:43 am Post Subject:
If they never take the competitor's policy away and spend 2-3 hours reading the contract, how can they, in all good conscience, remotely begin to tell the client what it does?
Now Max, I'm going to take you to task a little on this. I've replaced my fair share of policies--mostly in the state of NY where they have Reg 60--and I've never taken the policy and spent 2-3 hours reading it. In fact, most of time it's next to impossible to get the actual policy, or even a hypothetical.
New York tried to force something like this--to a much smaller level than reading the actual policy--with Regulation 60. The process for that is, the insured signs a request for the replacing company to then send to the potentially replaced company. The replaced company must send an inforce illustration to the replacing agent within 20 some odd days. Once the illustration has been received, the agent must fill out a comparison form, which is three pages long and compares the old policy to the proposed new policy looking at, death benefit, premium, riders, riders' costs, assumed cash values, assumed dividends, etc. The replacing agent must then explain why the replacement makes sense, why the insured cannot get the bennefits of the new policy with the old, and what benefits exist to the insured to keep the current policy they have. The agent is then allowed to take an application for the new policy and must have this comparison document and another disclosure about replacements signed by the client with the application.
It sounds like a good idea in theory, but in practice it's a mess. It's required for all life insurance contracts--annuities too--and holds up the really simply replacements like term for term switches (never really did a lot of these actually).
Sometimes replaced companies don't comply, or take forever. Sometimes the illustrations sent are a joke. Lots of agents ignore the process by saying "we're going to apply for new insurance and what you do with your old policy is up to you."
I had a situation with MetLife once when the request form was sent to a subsidiary of theirs and as a result not the right place. They waited 30 days to respond and sent me a letter dated 2 days before the the date of the original request form (how that could be possible is beyond me).
Replacements should be handled with care, but 2-3 hours of alone time with me and the actual policy I'm thinking about replacing is a bit much.
Posted: Mon Jan 11, 2010 02:29 am Post Subject:
BNTRS . . .
Yes, I'll grant you that Reg 60 is a b---- (I must admit that I have only passing, rather than working, knowledge of it, and don't know how it would affect the way I work).
Replacements should be handled with care, but 2-3 hours of alone time with me and the actual policy I'm thinking about replacing is a bit much.
I think you may have misinterpreted my comment. I don't spend 2-3 hours with the client reading through their policy. I do that at my convenience away from them in my home or office. My standard practice here in California is to ask to see the clients' policy and I give the policyowner a "pickup receipt" that I've autographed and which acknowledges my possession of the client's policy(ies) if I choose to take it with me. Upon returning the contracts to the owner, they sign a copy of it to indicate that they have received them back. The dual-signed document goes into the client file (electronically these days). It's the way I was trained back in 1980, and I try not to depart from it today.
I make a copy of every contract I pick up by scanning into my computer. Then I take the time to read through it on the computer, adding notes about items which I think the client needs to be aware. This analysis may form the basis of a replacement, or it may simply show the client the benefits of his policy and why he should not replace it . . . whatever is in the client's best interest.
I realize that most agents are not interested in doing the work it takes to properly analyze a person's insurance and simply replace policies willy-nilly to gain a commission. I'm a little/lot more thorough than that, and I take my pledge to the client seriously to only recommend a change if it will substantially improve their situation.
I never go to an appointment having counted my commission -- I could really care less. My concern is that every client knows what they have, what it does, and what they need to know to make sure it works properly for them. If they determine that the product is unsuitable for them, then I am usually prepared to recommend an alternative.
And in comparison to most other agents, I also spend about 60-90 minutes gathering financial information during a thorough personal interview process so I can make the proper recommendations to the client based on his personal situation. No cookie cutter solutions. When it comes to life business, I rarely seek to close on a first appointment, by choice, unless a person/family is entirely unprotected. I write good business, and it stays on the books longer than average.
When it comes to an actual replacement, CA law requires a replacement notice -- the language of the form is specified in the Code -- be signed by the agent and the policyowner/insured. The client keeps a copy, the original goes with the application to the replacing insurer, who must provide a copy to the original insurer within three business days. The original insurer must then choose to begin any effort at conservation within 20 days (as you mention), or forego the opportunity.
The replacement notice gives the client a warning that it is in his best interest to check with his existing agent/company to find out how his product works and what it does. Although, if I've done my job properly, the client will know this, I encourage them to do exactly that, to compare my analysis with the agent's understanding of their own product, and to let me know if I've made any mistakes.
Sometimes replaced companies don't comply, or take forever. Sometimes the illustrations sent are a joke. Lots of agents ignore the process by saying "we're going to apply for new insurance and what you do with your old policy is up to you."
In this, you and I see eye-to-eye! Obviously, clients have little awareness as to what the rigors of insurance laws require, and they trust the agent to be straight with them. It's those rascals who violate their responsibility of licensing that give the rest of us a black eye.
Posted: Mon Jan 11, 2010 03:38 am Post Subject:
Nope, no misinterpretation, I think you're spending a long time reading over policies. If you want to do that no problems there. I do think to believe other agents should join you in the effort to be thorough is a bit much.
According to what you've said though, it appears that you have a good thing going. Good for you and there's certainly no reason to change what seems to have worked for around 20 years.
It's been my experience that even the analytics (talking about clients here) lack the stamina to thoroughly pick through the pieces of a contract and determine if a replacement makes sense.
It's my opinion that if you cannot come up with a good reason to replace a policy within a few minutes of looking through the policy or at an illustration, it should be left alone. If someone wants a thorough review of their policy I suppose I can do that, but unless I'm going to be named the new servicing agent of the policy I'd sooner recommend the individual contact the customer service department of the insurance company, we can call together if they'd like, and I can help explain what they are being told. I'm not going to get into a practice of taking policies, scanning them into computers, reading through it, taking notes, and reporting back to the client. It's almost like trying to reinvent the wheel.
We can both agree on the importance of gather financial information, and documentation.
Thanks for the NML posting.
Posted: Mon Jan 11, 2010 10:52 am Post Subject:
I'm with BNTRS on this one. It takes about 5 minutes to see if something should be replaced. That's probably an exaggeration. Often, it just takes a matter of seconds.
Posted: Fri Jan 15, 2010 02:50 am Post Subject:
I have to agree with just about all of these posts. Guest 1 is right is the idea of how long it takes to figure out if replacement is a good/bad idea, but I would suggest that implies an experienced agent who actually has morals. Too often rookies make simple mistakes and probably more commonly it's the slimy agent who does an ill-advised replacement. It's sad, but you all know it's true.
Reading about Reg 60 in NY doesn't surprise me in the least. Every state I know is getting more and more restrictive in the laws and rules regarding every kind of replacement in the life and health arena, especially when considering long-term care, annuities and fixed to variable products.
State regulators are getting so protective of the (sic) consumer that it's getting more and more difficult for the agent to actively engage in this side of the business. Proper replacements are a great thing and can do wonderful things for the customer, however the "what you have to do's" mandated by the states is getting onerous in many instances.
In 7 states that I work within, the "paperwork" requirements alone, not including any application time, is easily an hour. Multiply that out a few times. Are the paperwork requirements, disclosure statements, notice of info practices ad nauseum a good thing? Hmmmmmmm...
I think they are, if only to protect the sappy and commonly ignorant consumer. Can annuity replacements/1035s be good? Abso-freakin'-lutely. Check out your state's disciplinary actions roll call, just about every state lists offenders and transgressors online at their websites. You'll see idiot producers getting whacked left and right for bad replacements, yet it continues. Go ahead and screw-up a senior citizen these days and see what happens. You don't wanna mess with that demographic, lemme tell you.
BTW Max, great post.
InsTeacher 8)
Posted: Fri Jan 15, 2010 03:24 pm Post Subject:
One of the issues with replacements and all of the extra paperwork is that it carries so many of the issues that we always see in good intentioned rules. When someone has to sign so many different forms, what usually happens is they simply can't/don't read them.
I remember when insurance illustrations went from one page to 10 pages. Trying to read through a 10 page illustration actually does more to confuse the insured than accomplish anything worthwhile.
Posted: Fri Jan 15, 2010 11:29 pm Post Subject:
We teach that replacement laws/regulations are there for the protection of the consumer . . . as it should be. Problem is, no one has "Ethical Agent" stamped on his/her forehead, and clients rely on us to bring them the truth.
I take seriously my responsibility to put the best product I have available at the best price according to the CLIENT'S needs. Unfortunately, every day my email inbox is flooded with this or that solicitation to sell annuities to old people and earn an 8 or 9 percent commission . . . all without a discussion of the surrender period that, upon closer examination, have surrender penalties that can be 15+ years in length and start as high as 30% in some annuities I've seen in the past 5-7 years.
Agents with $$ in their eyes can easily be persuaded to sell the wrong product to people in view of a commission check. Consumers frequently end up with products that are unsuitable and should never have been marketed to them in the first place.
So I am entirely in favor of our 24-hour advance notice to seniors courtesy of SB620 that took effect here in 2004, and was also adopted by the federal government in Medicare Supplement/Advantage sales. At the very least, the consumer is SUPPOSED to get a notice that very plainly states that INSURANCE/INSURANCE SALES will be the topic of the meeting in their home.
Too many fraudsters pretext themselves as "Trust Specialists", "Wealth Preservation Experts", "Senior Advisers" and on and on with titles that mean nothing in the real world, but are absolutely enticing to unsuspecting seniors who can ill-afford to make the kinds of mistakes they are too often deceived into making.
We need to bring back public executions for the jerks that rip off our senior citizens. And a little advance torture wouldn't be so bad either. (Kind of like the picadores at the bull fights before the matador enters the ring.)
Posted: Mon Jul 12, 2010 08:15 pm Post Subject: a few questions
Is it feasable to have a policy for the main insured and add the spouse as a rider? This used to save the insured $ instead of drawing up 2policies which put $ in the agents pocket. Is this still the case or has this changed? Also, It used to be true that the main insured was the main bread winner, the spouse and children would be riders on same policy based on need. Owner of the policy was not the main insured, it was the spouse or sig. other, so in the event of death they wouldn't be taxed on death benefit. Is this still all true or has it changed? If it has changed what is the case presently?
Posted: Sat Jan 09, 2010 06:42 am Post Subject:
Hi BNTRS,
There are several possible reasons, most likely unique to each situation.
I've come across agents who don't have the the right knowledge about their products. That mostly happens when the product or service keeps on changing it's terms (or for that matter the duration of such offers).
Likewise it also happens when the agent is new to that particular industry or service. The only exception to this wherein I've come across such agents is when it seemed that the agent might be trying to push me through some thing that I don't need at all.
Over here, I just wanted to know if you have any other reasons e.g. the NML agents are not properly trained etc.
Posted: Sat Jan 09, 2010 08:15 am Post Subject:
All too often, what gets said between agents and prospects/clients is repeated from what the agent heard another agent say in a different circumstance. Like the "rumor" game one may play, little twists become incorporated into the dialogue, and soon black has transformed into white.
agents who don't have the the right knowledge about their products
That's absolutely true! When I teach my prelicensing classes, invariably, I have students come to me with life policies they were told work one way, but when I explained how those same kinds of policies worked, the students come to me and say something like, "But that's not my agent told me." And I proceed to show them everything I discussed as it appears in their contract.
(On the other hand, it could just as well be that the client heard what they wanted to hear, too, and that the agent was being accurate and said none of the things that the client "remembers.")
It is incumbent on every licensed agent to both know and accurately portray his own products. And if they are trying to replace another company's products, they have to be able to accurately explain how that product works, too. If they never take the competitor's policy away and spend 2-3 hours reading the contract, how can they, in all good conscience, remotely begin to tell the client what it does?
"He said -- she said" is a lousy position in which to be placed. If agents just studied their own products (instead of merely reiterating what someone else told them), truly knew how they worked, and could easily communicate that information to their clients, the number of consumer complaints like the one leading to this discussion would be greatly diminished.
Posted: Sun Jan 10, 2010 03:43 am Post Subject:
If they never take the competitor's policy away and spend 2-3 hours reading the contract, how can they, in all good conscience, remotely begin to tell the client what it does?
Now Max, I'm going to take you to task a little on this. I've replaced my fair share of policies--mostly in the state of NY where they have Reg 60--and I've never taken the policy and spent 2-3 hours reading it. In fact, most of time it's next to impossible to get the actual policy, or even a hypothetical.
New York tried to force something like this--to a much smaller level than reading the actual policy--with Regulation 60. The process for that is, the insured signs a request for the replacing company to then send to the potentially replaced company. The replaced company must send an inforce illustration to the replacing agent within 20 some odd days. Once the illustration has been received, the agent must fill out a comparison form, which is three pages long and compares the old policy to the proposed new policy looking at, death benefit, premium, riders, riders' costs, assumed cash values, assumed dividends, etc. The replacing agent must then explain why the replacement makes sense, why the insured cannot get the bennefits of the new policy with the old, and what benefits exist to the insured to keep the current policy they have. The agent is then allowed to take an application for the new policy and must have this comparison document and another disclosure about replacements signed by the client with the application.
It sounds like a good idea in theory, but in practice it's a mess. It's required for all life insurance contracts--annuities too--and holds up the really simply replacements like term for term switches (never really did a lot of these actually).
Sometimes replaced companies don't comply, or take forever. Sometimes the illustrations sent are a joke. Lots of agents ignore the process by saying "we're going to apply for new insurance and what you do with your old policy is up to you."
I had a situation with MetLife once when the request form was sent to a subsidiary of theirs and as a result not the right place. They waited 30 days to respond and sent me a letter dated 2 days before the the date of the original request form (how that could be possible is beyond me).
Replacements should be handled with care, but 2-3 hours of alone time with me and the actual policy I'm thinking about replacing is a bit much.
Posted: Mon Jan 11, 2010 02:29 am Post Subject:
BNTRS . . .
Yes, I'll grant you that Reg 60 is a b---- (I must admit that I have only passing, rather than working, knowledge of it, and don't know how it would affect the way I work).
Replacements should be handled with care, but 2-3 hours of alone time with me and the actual policy I'm thinking about replacing is a bit much.
I think you may have misinterpreted my comment. I don't spend 2-3 hours with the client reading through their policy. I do that at my convenience away from them in my home or office. My standard practice here in California is to ask to see the clients' policy and I give the policyowner a "pickup receipt" that I've autographed and which acknowledges my possession of the client's policy(ies) if I choose to take it with me. Upon returning the contracts to the owner, they sign a copy of it to indicate that they have received them back. The dual-signed document goes into the client file (electronically these days). It's the way I was trained back in 1980, and I try not to depart from it today.
I make a copy of every contract I pick up by scanning into my computer. Then I take the time to read through it on the computer, adding notes about items which I think the client needs to be aware. This analysis may form the basis of a replacement, or it may simply show the client the benefits of his policy and why he should not replace it . . . whatever is in the client's best interest.
I realize that most agents are not interested in doing the work it takes to properly analyze a person's insurance and simply replace policies willy-nilly to gain a commission. I'm a little/lot more thorough than that, and I take my pledge to the client seriously to only recommend a change if it will substantially improve their situation.
I never go to an appointment having counted my commission -- I could really care less. My concern is that every client knows what they have, what it does, and what they need to know to make sure it works properly for them. If they determine that the product is unsuitable for them, then I am usually prepared to recommend an alternative.
And in comparison to most other agents, I also spend about 60-90 minutes gathering financial information during a thorough personal interview process so I can make the proper recommendations to the client based on his personal situation. No cookie cutter solutions. When it comes to life business, I rarely seek to close on a first appointment, by choice, unless a person/family is entirely unprotected. I write good business, and it stays on the books longer than average.
When it comes to an actual replacement, CA law requires a replacement notice -- the language of the form is specified in the Code -- be signed by the agent and the policyowner/insured. The client keeps a copy, the original goes with the application to the replacing insurer, who must provide a copy to the original insurer within three business days. The original insurer must then choose to begin any effort at conservation within 20 days (as you mention), or forego the opportunity.
The replacement notice gives the client a warning that it is in his best interest to check with his existing agent/company to find out how his product works and what it does. Although, if I've done my job properly, the client will know this, I encourage them to do exactly that, to compare my analysis with the agent's understanding of their own product, and to let me know if I've made any mistakes.
Sometimes replaced companies don't comply, or take forever. Sometimes the illustrations sent are a joke. Lots of agents ignore the process by saying "we're going to apply for new insurance and what you do with your old policy is up to you."
In this, you and I see eye-to-eye! Obviously, clients have little awareness as to what the rigors of insurance laws require, and they trust the agent to be straight with them. It's those rascals who violate their responsibility of licensing that give the rest of us a black eye.
Posted: Mon Jan 11, 2010 03:38 am Post Subject:
Nope, no misinterpretation, I think you're spending a long time reading over policies. If you want to do that no problems there. I do think to believe other agents should join you in the effort to be thorough is a bit much.
According to what you've said though, it appears that you have a good thing going. Good for you and there's certainly no reason to change what seems to have worked for around 20 years.
It's been my experience that even the analytics (talking about clients here) lack the stamina to thoroughly pick through the pieces of a contract and determine if a replacement makes sense.
It's my opinion that if you cannot come up with a good reason to replace a policy within a few minutes of looking through the policy or at an illustration, it should be left alone. If someone wants a thorough review of their policy I suppose I can do that, but unless I'm going to be named the new servicing agent of the policy I'd sooner recommend the individual contact the customer service department of the insurance company, we can call together if they'd like, and I can help explain what they are being told. I'm not going to get into a practice of taking policies, scanning them into computers, reading through it, taking notes, and reporting back to the client. It's almost like trying to reinvent the wheel.
We can both agree on the importance of gather financial information, and documentation.
Thanks for the NML posting.
Posted: Mon Jan 11, 2010 10:52 am Post Subject:
I'm with BNTRS on this one. It takes about 5 minutes to see if something should be replaced. That's probably an exaggeration. Often, it just takes a matter of seconds.
Posted: Fri Jan 15, 2010 02:50 am Post Subject:
I have to agree with just about all of these posts. Guest 1 is right is the idea of how long it takes to figure out if replacement is a good/bad idea, but I would suggest that implies an experienced agent who actually has morals. Too often rookies make simple mistakes and probably more commonly it's the slimy agent who does an ill-advised replacement. It's sad, but you all know it's true.
Reading about Reg 60 in NY doesn't surprise me in the least. Every state I know is getting more and more restrictive in the laws and rules regarding every kind of replacement in the life and health arena, especially when considering long-term care, annuities and fixed to variable products.
State regulators are getting so protective of the (sic) consumer that it's getting more and more difficult for the agent to actively engage in this side of the business. Proper replacements are a great thing and can do wonderful things for the customer, however the "what you have to do's" mandated by the states is getting onerous in many instances.
In 7 states that I work within, the "paperwork" requirements alone, not including any application time, is easily an hour. Multiply that out a few times. Are the paperwork requirements, disclosure statements, notice of info practices ad nauseum a good thing? Hmmmmmmm...
I think they are, if only to protect the sappy and commonly ignorant consumer. Can annuity replacements/1035s be good? Abso-freakin'-lutely. Check out your state's disciplinary actions roll call, just about every state lists offenders and transgressors online at their websites. You'll see idiot producers getting whacked left and right for bad replacements, yet it continues. Go ahead and screw-up a senior citizen these days and see what happens. You don't wanna mess with that demographic, lemme tell you.
BTW Max, great post.
InsTeacher 8)
Posted: Fri Jan 15, 2010 03:24 pm Post Subject:
One of the issues with replacements and all of the extra paperwork is that it carries so many of the issues that we always see in good intentioned rules. When someone has to sign so many different forms, what usually happens is they simply can't/don't read them.
I remember when insurance illustrations went from one page to 10 pages. Trying to read through a 10 page illustration actually does more to confuse the insured than accomplish anything worthwhile.
Posted: Fri Jan 15, 2010 11:29 pm Post Subject:
We teach that replacement laws/regulations are there for the protection of the consumer . . . as it should be. Problem is, no one has "Ethical Agent" stamped on his/her forehead, and clients rely on us to bring them the truth.
I take seriously my responsibility to put the best product I have available at the best price according to the CLIENT'S needs. Unfortunately, every day my email inbox is flooded with this or that solicitation to sell annuities to old people and earn an 8 or 9 percent commission . . . all without a discussion of the surrender period that, upon closer examination, have surrender penalties that can be 15+ years in length and start as high as 30% in some annuities I've seen in the past 5-7 years.
Agents with $$ in their eyes can easily be persuaded to sell the wrong product to people in view of a commission check. Consumers frequently end up with products that are unsuitable and should never have been marketed to them in the first place.
So I am entirely in favor of our 24-hour advance notice to seniors courtesy of SB620 that took effect here in 2004, and was also adopted by the federal government in Medicare Supplement/Advantage sales. At the very least, the consumer is SUPPOSED to get a notice that very plainly states that INSURANCE/INSURANCE SALES will be the topic of the meeting in their home.
Too many fraudsters pretext themselves as "Trust Specialists", "Wealth Preservation Experts", "Senior Advisers" and on and on with titles that mean nothing in the real world, but are absolutely enticing to unsuspecting seniors who can ill-afford to make the kinds of mistakes they are too often deceived into making.
We need to bring back public executions for the jerks that rip off our senior citizens. And a little advance torture wouldn't be so bad either. (Kind of like the picadores at the bull fights before the matador enters the ring.)
Posted: Mon Jul 12, 2010 08:15 pm Post Subject: a few questions
Is it feasable to have a policy for the main insured and add the spouse as a rider? This used to save the insured $ instead of drawing up 2policies which put $ in the agents pocket. Is this still the case or has this changed? Also, It used to be true that the main insured was the main bread winner, the spouse and children would be riders on same policy based on need. Owner of the policy was not the main insured, it was the spouse or sig. other, so in the event of death they wouldn't be taxed on death benefit. Is this still all true or has it changed? If it has changed what is the case presently?
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