April 2020

You may not be aware that many direct online writers of term insurance like Ethos or Select Quote have seen significant increases in their online applications in the last 30 days, as much as 30%-40%. Considering these increases are from applicants that are unsolicited and applying direct, is pretty impressive.

Phil Murphy, vice president of insurance at Ethos, a company that sells life insurance online, said in an email that Ethos is seeing spikes in life insurance applications submitted. “This virus has people thinking about their mortality, and life insurance is increasingly top of mind now,” Murphy said.

Imagine what the increase in your applications count would be if your agency were to personally contact your client base to review their life insurance needs. With so many people sheltering in place, day time contacts make a lot of sense, they are an excellent way to help your clients with their insurance protection needs, and they are a way to enhance agency revenue.

RAM Group can help you help your clients secure their life insurance with no in person in person meeting, online application and no wet client signature all electronic, non-medical underwriting, so no para-meds to visit the clients home. With face amounts up to $2,000,000.00 through age 65.

The term collateral damage was originally used during warfare when a military target was struck. Even when the attack was successful it often left behind peripheral harmful results – usually affecting nearby innocent civilians. The phrase is now more broadly used to describe negative unintended consequences of an attempt to do something beneficial.

Life insurance is often used as security on a loan, usually in a business situation.

Urgency of the circumstances (or poor advice) usually results in a creditor simply being added as beneficiary on the policy for the amount of the loan. The result is a prime opportunity for collateral damage. Parties to the loan or the policy seldom think to adjust the creditor’s beneficial interest as the loan is paid down or even paid off. So if death occurs the creditor is unjustly enriched and the remaining beneficiaries are short-changed. Or a creditor’s beneficial interest can be too easily changed or eliminated without his or her knowledge. So . . .

Rule #1 – Never secure a loan with a beneficiary designation. Always use a collateral assignment!

A collateral assignment (C/A) is a formally documented lien on the policy in favor of the creditor who stands first in line for the share of the death benefit described by the terms of the C/A. But there can be collateral damage from a collateral agreement if things are not done properly. So . . .

* Rule #2 – Use the carrier’s C/A form.

* Rule #3 – Get the carrier’s permission before making any modifications on the C/A form

* Rule #4 – To avoid the appearance of practicing law, only modify the C/A at the specific direction of the client or the client’s attorney.

* Rule #5 – Make sure the C/A is dated after a time the policy is in force.

* Rule #6 – Make sure the completed C/A is filled with the carrier, or the carrier won’t know to protect the rights of the creditor if benefits are paid.

* Rule #7 – MEC Alert! Make sure the client understands that if a C/A is filed on a modified endowment contract the amount secured by the C/A is reportable taxable income to the extent of gain in the contract (like a LIFO distribution).

For all its conceptual simplicity, the execution of a collateral assignment usually has many problems as different circumstances pop up with each case. Call with any questions or for assistance with the drafting, approval and implementation of a collateral assignment at 800-686-4238 or email rohrerj@ram-group.net

Original Author credit: Tom Virkler, Advanced Markets

With the 10 year Treasury and historic lows, some GUL products are very much underpriced. I would suggest you look at AIG’s GUL as they are one of the best values in the industry right now, and I understand they will most likely increase premiums by the end of May.

Also, you most likely have been notified due to Covid, several of our top tier life carriers have temporarily reduced the maximum issue age (most age 59 0r 65), over 65 this represent 20-25% of our normal new business submit. I would suggest you look at Banner in older age cells as their 10 & 15 year Opti-Term is issued through age 75. In addition, they enhanced their AppAssit online submission process. Qualified Applicants can apply up to $2,000,000.00 through age 65 with no exam or APS with immediate approval, applicants must complete the Journey application which is e-mailed to them for UW review and if approved they will be immediately notified of rate class and premium. Banner’s AppAssist is by far the easiest for the agent to complete, under 5 minutes. Note, for applicant that do not qualify for the Journey application or UW does not approve instant issue, they will go through the normal UW process.

Author: Melvin Rohrer, RAM GROUP

A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulations (the regulations) issued by the New York State Department of Financial Services (Department), extend grace periods and give policyowners other rights under their life insurance policy or annuity contract if they can demonstrate financial hardship as a result of the novel coronavirus (COVID 19) pandemic. These grace periods and rights are currently in effect but are temporary, though they may be extended further. Please check the Department’s website for updates.

The regulation also requires insurance carriers to notify their producers of the regulation’s requirements; including a servicing producer’s obligation to provide notice of the regulation to in-force clients. A copy of the Executive Order and regulations can be found here and here, respectively.

Insurance Payments – Grace Period
If a policyowner can demonstrate financial hardship as a result of the COVID-19 pandemic, the insurer must extend to 90 days the applicable grace period for the payment of premiums and fees under the life insurance policy or annuity contract. If a policyowner does not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, the insurer may not impose any late fees relating to the premium payment or report the policyowner to a credit reporting agency or a debt collection agency regarding such premium payment.

Catching Up On Overdue Insurance Payments
The regulations also require insurers to permit policyowners to pay the overdue premium over a 12-month period if they did not make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic and can still demonstrate financial hardship as a result of the COVID-19 pandemic. This also applies if the insurer sent a nonpayment cancellation notice to a policyowner prior to March 29, 2020.

How to Demonstrate Financial Hardship
If a policyowner is unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, they may submit to their insurer a statement swearing or affirming in writing under penalty of perjury that they are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer shall accept as satisfactory proof. Such statement is not required to be notarized.

Notice to Policyowners
The regulations also require that producers servicing inforce insurance policies or annuity contracts shall mail or provide notice of the regulations requirements to their clients. A model client notice and guidance from the department can be found here and here, respectively.

Questions
If you have any questions regarding your rights under the Executive Order or regulations, please visit the New York Department’s website for additional information.