Term Life Insurance. Made. Easy.

I have come to believe that almost everyone who is thinking about Life Insurance starts at Google. From Google they quickly move to a website where they plug in the fewest data points possible (age, gender, amount of insurance, term) and get a quote.  Next, back to Google. Repeat.  Next, get distracted by anything on the web more interesting that Life Insurance and drift away to sports, celebrity gossip, cat videos, etc.

I’ve started a series of posts with tips for buying Term Life Insurance on this blog, but the #1 tip to remember when shopping online is that you always get the teaser rates online.  Very few people actually qualify for those rates, but the websites that generate traffic stay in business by showing the best and hoping that it works out in the end.

Out of respect for your intelligence and your time, we have partnered with Banner Life to bring you Quotes Done Right.  Chances are good that if you have searched for Life Insurance rates online you’ve seen Banner, and usually in the top 1-2 for price. So take confidence in their competitiveness and check out Quotes Done Right. Take your sweet time playing with the questions until you are satisfied, and when you’re comfortable that the rates and coverage are right – submit a ticket and get the policy.  It’s a brave new world, and this new platform will let you build the perfect Term Life Insurance policy for your needs and at your pace.

QDR-button-for-email-14-032

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Update on New ACA Rules

A very good breakdown of the changes from RGB…

Summary of Shared Responsibility News  

  • Employers with fewer than 50 full time equivalent employees: Not required to offer coverage in 2015, or in any year, under the Affordable Care Act.
  • Employers with 100 or more full time equivalent employees: New rules phase in the percentage of employees who must be offered coverage to 70 percent of full time employees in 2015 and 95 percent in 2016 and beyond, or be potentially      subject to a penalty assessment beginning in 2015. 
  • Employers with 50 to 99 full time equivalent employees: Must offer coverage to 95% of their full-time employees in 2016 or face potential penalty payments.

Note: Full time equivalent employees (FTE’s) are a combination of full and part time employees (see below for how to calculate). FTE’s are used to determine if an employer is subject to Shared Responsibility. FTE’s need not be offered coverage. Only full time employees (and their dependents) must be offered coverage.
To calculate Full Time Equivalent employees, add the total number of hours for all part time employees for that month, divide by 120, and add the resulting number to the number of full time employees.
  
Following are a few of the differences between requirements prior to yesterday’s announcement and the Final Rule to be released tomorrow.
(Note: There is a link to the Final Rule below.)
Old rule:  Employers with over 50 Full Time Equivalent employees must offer coverage or be penalized in 2015.

Final rule: Employers with over 100 Full Time Equivalent employees must offer coverage or be penalized in 2015.  Employers with 50-99 Full Time Equivalent employees must offer coverage or be penalized in 2016.

Old rule: Employers with over 50 FTE’s must offer coverage to at least 95% of full time employees or be subject to penalty in 2015.

Final rule: Employers with 100 or more FTE’s must offer coverage to at least 70% of full time employees in 2015, and 95% in 2016 or be subject to penalty.

Old rule: Employers can determine whether they had at least 50 full-time or full-time equivalent employees in the previous year by counting at least six consecutive months, instead of a full year

Final rule: For 2015 employers can determine whether they had at least 100 full-time or full-time equivalent employees in the previous year by counting at least six consecutive months, instead of a full year:
 
Old rule: Dependent coverage: Employers must offer coverage to their full-time employees and dependents

Final rule:  The rule that employers must offer coverage to their full-time employees and dependents will not apply in 2015 for employers that are taking steps to arrange for dependent coverage to begin in 2016.

Old rule: Dependents defined as children under age 26. Spouses are not included in the definition of dependents

Final rule: No change

Actual Treasury Press Release is HERE. 

Purves Insurance is located in Davis, CA and we love to read enormous press releases.

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2 Major changes to ACA announced; one final

These are both very big changes for employers with more than 50 employees.

First, one change that is not yet final but advanced on Friday would increase the hourly work requirement from 30/week to 40/week to determine “full-time”.  See here for more. That is a very big deal for small businesses trying to grasp measurement periods and who would be eligible for coverage and what would trigger a penalty.  Watch this one…

Next, and I can’t believe this one, the Mandate for 50+ employers has been delayed another full year.  Yes, just like that, to 1/1/16.  More here.

We’ll keep you posted if there is more.  Pretty safe bet it won’t be today!

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Term Life Insurance Secrets (Part 1)

Yes, that’s right, secrets.  Here are a couple of secrets to help you when you’re shopping:

1. Internet Term Life Sites Always show you teaser rates
If you start your search for a new Term Life policy like most people do, on Google, you will end up on any number of sites promising the best Term Life rates.  Some will even talk about the “price war” between carriers, etc.  Most will allow you to get a quick quote.  BEWARE: Every carrier has many rating levels, such as Super Preferred, Preferred, Standard Plus, Standard and so forth.  But what you will see on term life quoting engines is almost always the Preferred Best rates, which few people actually qualify for.

Isn’t it a bait-n-switch, and wouldn’t most people be ticked off when they get their final approval at something more expensive?  Yes and yes.  But these sites (Insurance Brokers with a website) are betting that once you’ve gone through 6 weeks of underwriting, releasing medical records and a nurse’s visit… that you’d rather just take the policy and move on than re-apply and go through it all again.

But you don’t have to rely on teaser rates. A good broker (ahem, us) can walk you through a little pre-underwriting and determine a proper expectation of rate before you go into underwriting.  If your dad and mom both had cancer, you’re not getting a Preferred rate.  Let’s just discover that up front – no surprises.

2. Nobody has an exclusive deal, or the best rates on Term Life Insurance
Any good insurance broker (again, Purves Insurance…) will be able to give you a quote with all of the most competitive Term Life carriers.  Yes, Dave Ramsey fans, I can give you the same policy at the same rates as his preferred Term Life broker.  The secret is that once we establish that Banner Life, for example, has the best policy and rates for you, the application process is the same with me, Super Term Life Busters.com (I made that up) or your brother in law who got his insurance license last week.  Now, we have recently found a program that streamlines the process and makes it less painful for everyone, but the underwriting process ALWAYS will include these things:
A. Application (may be online, may be submitted by me, may be old-fashioned paper – more often now it’s a phone interview with the carrier)
B. Nurse’s visit – they will take a little blood & urine, ask health questions
C. Medical Records – The life insurance carrier isn’t going to take your word that you never were treated for anything bad. That’s just the way it is.
Once the underwriter has all 3 of these things, they will compare the data to their (very inflexible) underwriting guidelines and issue a “rate determination” and an “offer”.  For example: We have determined that you are a Standard risk and are offering a 20-Year term policy for $500,000.  You can then take it or leave it.  But whether you bought the policy with Purves Insurance or your brother in law, the underwriting guidelines are fixed, non-negotiable and the same.

The value of a great insurance broker is NOT in giving you a cheap quote, but knowing which company is best for you up front, setting the right expectations and also knowing what to do when your chosen carrier comes back with a bad surprise.  That, my friends, is where experience and knowing who you are dealing with makes all the difference in the world.

In the next part of Term Life Secrets, I’ll discuss conversion and Term UL policies, and why it’s not always about price with Term Life Insurance.

Purves Insurance is located in Davis, CA and hates underwriting surprises as mush as you do.

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9 volt batteries burn a house down!

Yikes!  Brittany Stoker in our office found this video today.  This poor man feels awful about burning his house down, and I was as surprised as anyone to learn how a couple of old batteries could become so dangerous.  Watch the video for more; he explains how the fire started at about 1:45.

Videos like this always come to mind when someone wants to save $50 by reducing their insurance coverage.  There is a long list of ways to save money on your insurance (bundle home + auto, for one), but one of the things that we will never do is lower coverage to save a few bucks.  Believe me, the last thing on this guy’s mind was how much he paid for Homeowner’s insurance.

Be careful out there!

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Flood Insurance Update

Bigger Premiums from Biggert-Waters
Many flood insurance policyholders are staring down rate increases and wondering where they came from. The answer is the Biggert-Waters Act of 2013. The purpose of the law was to raise revenue for the National Insurance Flood Program, which has been under water for several years.  Ok, that’s my only flood insurance joke. Financially speaking, the program is a loser, with the Federal Government (read: taxpayer) subsidizing many flood claims while keeping flood insurance premiums down.  Something had to be done to bring the program back into the black, and treating risks as risks made sense.  The hard fact is that in areas where flood premiums are already high they are still getting large increases, and will continue to have increases unless some Federal relief comes.

Affect on Home Buyers
Home Buyers face an even more difficult proposition.  Instead of the 25%/year premium increases that in-force policyholders are experiencing, a home buyer who is required to buy flood insurance will get the new, fully-underwritten premium.  In other words, no easing into the new rates at a rate of 25% per year.  With new laws requiring lenders to be precise in their closing costs estimates and the already tight loan underwriting guideline – home buyers would be very wise to double-check the flood insurance requirement and exactly how much the premium will cost.

How Much?
Initially we were told that rates would go up 25%/year for 5 years.  Then we were told to ignore that last part about a 5-year max.  Great… For policy holders with the PRP – Preferred Risk Policy – the increases will be in the neighborhood of $100.  For those outside of the PRP areas it will be much more.  It is unknown at this point how long it will take to increase the premiums up to the point where all properties are rated at their proper risk-related rate.  But this just goes to show how much subsidy money there has been in the flood insurance marketplace.

Relief in Sight?
Biggert -Waters went into effect on 10/1/2013.  It seemed like the next day we were hearing the screams of the damned (people opening their flood insurance bill).  In the first week of October Maxine Waters (co-author) was talking about emergency legislation to kill her own law.  The Senate was expected to act before Christmas.  Just yesterday news of budget deal in the Congress including “some relief” from the Biggert-Waters increases, but best indications are that it is an 8-month delay for a fraction of affected policyholders.  We expect clearer details soon, but both the House and the Senate leaders have been clear that they are in no hurry to roll back the entire law.  I would never pretend to know how the legislature will act on any particular law, but it seems that they only thing that will provide relief is when the end of the new “delay” comes and angry policyholders with large increases once again make noise with their elected officials.

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Flood Insurance Changes are here again!

Flood Insurance Changes Effective 10/1/2013
On 10/1/2013 the National Flood Insurance Program (NFIP) introduced changes to their pricing methodology.  These changes are a result of the Bigger-Waters Flood Insurance Reform Act of 2012, which extended the NFIP for 5 years.  Biggert-Waters’ primary goal was to make the NFIP financially viable, since the program is currently about $20B in debt.  In order to accomplish financial viability, the new law will require that flood rates accurately reflect the flood risk of the specific property.  Imagine that! The rates will actually be based on the risk of flood to each specific property!  This means that if you’re in a higher-risk area, you can expect rates to rise dramatically.

Examples of Rate Changes in the Sacramento Region
Preferred Risk Policy (PRP) Extension rates have increased from $412/yr to $489/yr.  These rates will continue to increase by 20% per year for the next 4 years.

Pre-FIRM structures (approx. 1980, but call us to check) will no longer receive subsidized rates.  Current owners of pre-FIRM structures will see their flood insurance rates increase by 25% per year until they reach the actuarially calculated rate.  In order to calculate this rate the property owner will be required to provide their carrier with documentation including an elevation certificate.

Heads Up, Home Buyers and Realtors
The biggest issue we’ve seen so far has been with pre-FIRM structures (i.e. older homes) located in special flood hazard areas (SFHAs) where a base flood elevation (BFE) has not yet been determined.  Without having a BFE to compare the elevation certificate to it can be difficult to determine the flood insurance rate.  In this situation the policy will typically need to be manually rated by the flood insurance company.  With all of the recent changes this process, which used to take 4 hours, can take up to 4 days.  These kinds of waits are not the norm, but if you are buying a home and don’t check into flood insurance until the last minute you could hurt your loan lock or other home-purchase contract items.

Elevation certificates will be required in order to provide flood insurance for newly purchased pre-FIRM structures in SFHAs.  These certificates can cost between $300 and $500, and can also take a few days to generate.  With the demand for certificates increasing, you can expect it to take even longer to get a certificate.

Conclusion
Flood insurance is one of the simplest insurance policies that you will ever buy.  But the process of buying it has just become very complex for some homes.  You need an insurance agent who can help you navigate the complexities of FIRM dates, flood zones, communities, BFE’s & SHFA’s, not to mention elevation certificates.  Call Purves Insurance today at (530) 756-5561, or visit our website, and let us take care of it for you.

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