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3 Year-End Tips

It’s almost October! The leaves will begin to change color, pumpkin spice everything will appear in the stores, and for some (not in Florida) the weather has already started to be cooler.  These are all signs that year-end is approaching and soon we will be notified of critical deadlines from carriers.  As they are received, we will be sure to keep you informed.

Below are three tips for “teeing up” cases for year-end close:

  1. Engage your clients NOW so that they will start thinking about insurance.  September is Insurance Awareness month and a great time to remind everyone of the importance of insurance.  Tell them a story.  For example, the client that was approved best class but procrastinated.  Due to his procrastination, policy issue was delayed, and a good health statement was required.  Unfortunately, after approval and before delivery, this client had a heart attack and his coverage was postponed indefinitely.  The time for insurance is now!
  2. A complete and properly executed application package is critical.  This includes medicals, financials, all necessary paperwork with all questions answered completely/signed AND a cover letter.  Give the underwriter a complete picture allowing them to review the case one time and make an equitable decision quickly.  This is appreciated by underwriters all year round, but especially during the busy “ber” months.
  3. Utilize e-delivery as much as possible.  The holidays can make it difficult to meet with your clients.  It is particularly important to watch your calendar when working with a trust.  Give trustees enough time for the trust to be funded in order to pay the premium.

Let’s finish 2019 strong!

Call or email us to discuss this important topic.  We would love to hear from you.

Trina Fitch, FALU, FLHC, AIAA, ACS

Director of Underwriting for First Choice Brokerage

Peachie Thompson, AALU, ALMI, ACS

Chief Operating Officer for First Choice Brokerage

Premium Financed Corporate-owned Life Insurance

Why do Employers Purchase Corporate Owned Life Insurance on Their Employees?

• To recruit and retain top talent as well as Provide Key Man Coverage for the Business
• Funds are readily available to replace an employee in the event of an untimely death
• Many Public, Private and Not‐For‐Profit companies own Corporate Owned Life Insurance

What is Corporate Owned Life Insurance?

• Death Benefit Only Plan Using Permanent Indexed Universal Life Insurance
• Used For Key Man Insurance And/or Employee Benefits
• Vesting Rules Are Flexible And Determined By The Sponsor since this is a Non‐Qualified Plan
• Death Benefits Are Typically Split 50% To The Employer And 50% To The Beneficiaries Of The Employees

What are The Benefits Corporate Owned Life Insurance?

• Upon insureds death, beneficiary receives typically 5‐10X the employee’s annual salary at plans start date
• Allows the employer to recoup the cost of the plan (typically with a positive return)
• Portion of the death benefit (typically 50%)
• Use of any excess cash value (100%)
• Properly structured plans eliminate taxes on premiums & interest to employees
• Transactions are balance sheet neutral/accretive ‐ cash value of the policies are guaranteed
to equal at least 100% of the premiums paid in the first 7 years.
• If the employee leaves the company before the benefit vests, 100% of the death benefit goes to the employer

How It Works


• Once the Policy Cash Value Exceeds the Loan Amount (typically starting in years 7‐10), The Interest On The Loan Can Be Rollup
Into The Loan Balance. At That Time The Sponsor Can Also Take Out Policy Loans Which Can Be Used For General
Corporate Purposes.
• Guaranteed Issue Can Be Used For Multi‐life Transactions With 10 Or More W‐2 Employees.
• Eligible Employees Must Be Less Than 70, Earn $75,000+/yr. & Be Considered White Collar Employees.
• Most policies will have an Enhanced Cash Surrender Rider Eliminating/Reducing the Need for Additional Loan Collateral.
• Most Clients Prefer a 1 yr. Point To Point Index Strategy on The S&P 500 Index With a 0‐1% Floor And A Cap Of 10‐13%.
• Face Amounts Per Employee Are Typically 5 To 10X Salary Up To A Maximum Of $4‐6 million.

Call or email me to discuss this important topic. I would love to hear from you.

Craig Waldenmaier

President & Chief Executive Officer for First Choice Brokerage

Field Underwriting: Building Your File

As the agent, you have worked hard and invested your time and energy into cultivating relationships with your clients. The time between an introduction and a sale takes time and effort. When a client says yes, you want to ensure that the next steps in the process are as easy as possible.

Field underwriting is as critical to the process as selecting the product or carrier when submitting a life insurance application. When done well, field underwriting will help you find the best carrier and best offer for your client’s needs based on cost AND underwriting.

Before completing a formal application uncover relevant facts and start to build your file. Here are some questions to ask yourself:

  1. Medical History: What is the client’s medical history? Any concerns? Is preliminary informal underwriting required before a formal application?
  2. Purpose: What is the financial need and purpose for coverage? Business? Personal?
  3. Coverage: Is there other coverage inforce? What is the total line of coverage being requested?
  4. Finances: Do the financial circumstances of the client support the requested face amount as well as the total line of coverage that will ultimately be inforce?
  5. Documentation: What medical and financial supporting documentation is required?
  6. Gaps: Are there any gaps in the information that need to be addressed before submitting the case to a carrier?

When building your file your goal is to have clear answers to all of the above. When it is time to submit the formal application, you will have the complete picture to lay out before the underwriter for review. This will allow the underwriter to look at the file once providing quicker and more favorable decisions.

If you find your client has a complex medical history, have a candid conversation. In these cases, it may be beneficial to complete a preliminary inquiry fact finder to gather pertinent details of diagnoses, treatment and physician(s). With a signed authorization, medical records can be requested for review before a formal submission. Informal inquiries to various carriers will help you define the best carrier based on your client’s personal history.

When you are ready to submit the formal application, preparing a detailed cover letter is very important. This communication to the underwriter allows you to pull all the facts of the case together and provide additional details that may not be clearly evident in the application package.

Producers and home office underwriters live in two different worlds and speak different languages. It may seem hard to believe at times, but producers and home office underwriters are on the same team and have the same end result in mind…. getting the policy approved and issued at the best possible rate class. Getting the best decision for your client is the result of good field underwriting. Investing the time up front to do it well will be well worth the effort when you receive that best class rating!

Call or email me to discuss this important topic.  I would love to hear from you.

Trina Fitch, FALU, FLHC, AIAA, ACS

Director of Underwriting for First Choice Brokerage

Consider This When Picking Term Insurance

After you perform a thorough needs analysis and a determination has been made that term insurance is appropriate for your client, choosing a carrier to place the coverage with is critical.  Factors beyond just going with the cheapest premium must be taken into consideration.  These factors include conversion options, riders and carrier ratings.


Most term insurance policies issued today have some form of conversion option giving your client the ability to procure permanent insurance without the need for evidence of insurability.  Not all conversion options are equal and following are 3 important factors to consider when evaluating conversions options:

  1. Conversion option duration.  Many conversion options are available for the entire length of the level term period of policy however, some policies may only offer conversion privileges for a limited time period such as the first 10 years of a 20-year policy.
  2. Max age available for conversion.  Policies generally have a maximum age that conversion is allowed even if the policy is within the level term period. The most common age is 70 with some carriers using 65 or 75 as the cutoff age.
  3. Products availability.  The best conversion option allows conversion to the carrier’s full portfolio during the conversion period and it also has language in the policy that contractually guarantees this option. Some carriers may limit the time period of the availability of the full portfolio for conversion.  For example, allowing conversion to the full portfolio only in the first 7 years then allowing conversion to a limited portfolio thereafter.



Understanding a term policy’s additional benefits and the company itself will help add value to your client and provide additional protection for the future.

  1.  Waiver of Premium Rider.  An optional rider that waives premium payments if the insured is totally disabled under the definition of the contract. Wavier of Premium is the most common rider issued on term policies.
  2. Child/Spousal Term Rider.  Provides death benefit protection for the spouse or children of the insured. Policy limits are generally no more than $25k.  Generally, these riders have few to no underwriting requirements and may allow conversion to a permanent policy upon a child reaching adulthood.
  3. Accelerated Death Benefit.  Allows the insured to take a portion of the death benefit if diagnosed with a qualifying terminal illness.
  4. Accidental Death Benefit.  An additional benefit paid if the insureds death is caused by an accident. This typically excludes acts of war, death caused by illegal activities, or from a dangerous activity commonly engaged in by the insured.


Financial Strength

  1.  Rating Services.  An insurance company’s financial stability and rating are important in determining their ability to pay claims and service the insured’s needs. Ratings from A.M. Best, Moody’s, and/or Standard and Poor’s are a well-established and time-tested indicator of a company’s financial strengths.
  2. Company Size, Age, & History.  An insured with a $1m life insurance policy may be better served with an insurance company with $1 billion is assets than a company with only $50 million in assets.  While a larger established company may not necessarily be better than a smaller new company a strong historical track record of paying claims and treaty policy holders fairly provides an indication of a company’s culture.

Call or email me to discuss this important topic.  I would love to hear from you.

Peachie Thompson, AALU, ALMI, ACS

Chief Operating Officer for First Choice Brokerage

Life Insurance Policy Review

When was the last time you reviewed your clients’ policies?  Are you certain that their life insurance policies are performing as expected?  Is it still suitable for them?

Think about how 10 years ago, the ability to procure additional protection through riders such as chronic illness, disability or long-term care were not readily available!  If that’s not enough, remember that significant adverse estate tax consequences may be triggered by incorrect ownership if not properly addressed.  A simple ownership mistake can do that?! You bet.

The performance of a life insurance policy is constantly fluctuating based on expense projections and earnings of the issuing insurer.  Here are some key factors to consider:

  1. Health changes: a shortened life expectancy may mean checking if a client may be able to suspend premium payments entirely. On the flipside, very healthy clients may need to increase premiums to ensure policy lives as long as they do!
  2. Longer life expectancies discount: super preferred and/or preferred classes discount may not have existed when the original policy was issued.
  3. Missed or late payments: could decrease performance projections and may eat into the policy cash values or even require additional premiums to prevent policy lapse.
  4. Insurance company expense: some insurers pass expense savings to policyholders while others don’t.
  5. Investment yields: interest rate environment impacts performance projections. With low investment yields, dividends or interest rates credited to the policy decreases causing increased premium amount and/or frequency.  Original policy design may be jeopardized.

Sometimes it is best to re-engineer a policy to keep it on track.  Sometimes it is worth looking into new products, features or pricing that resulted from insurers’ competition and consolidation.  At the end of the day, why leave your clients’ financial security to chance?

Call or email me to discuss this important topic.  I would love to hear from you.

Top 10 Life Changes That May Trigger Adjustments


Marriage or divorce

Birth or college graduation of children

Income or career changes


Purchase of new home or paid off mortgage

New business or business sold

Loss or addition of beneficiaries

Changes in business partnerships or structure

Changes in tax laws

Peachie Thompson, AALU, ALMI, ACS

Chief Operating Officer for First Choice Brokerage

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