Executives of companies, in spite of the fact that they have professionally “made it”, don’t necessarily have every life category nailed and like the rest of us who are over age 50 or 60, may not be a poster child for $12 a month life insurance. The truth is that depending on the company only about 10% to 15% of people qualify for the best life insurance rates and in spite of CEO’s having access to the best health care and “executive health programs”, they fall prey to the same real life bumps in the road as anyone else. Whether the President of the company is a bit on the chubby side, has family history issues, or has had a dui in their past, when it comes to acquiring business or personal life insurance they should seek out an independent agent who is free to put the business where he or she will get the best value for their money.
So, why is business life insurance, and especially policies for executives like officers or CEO’s different from other life insurance?
1. When a person is buying personal insurance they often have some flexibility in the amount of life insurance. So, for instance, if a person applies for $500,000 of 30 year term life insurance at the best rate class at a budgeted price of $75 s month and the policy is approved at the third best rate class, usually call standard plus, at $140 a month, they can manipulate the amount and term length to stay within their budget. They might need to go down to $350,000 or shorten the term length to 20 years, but they have that flexibility. When the bank tells a CEO that he needs a $1 million policy for loan collateral for 20 years, a change in price isn’t going to change the company’s obligation to buy the policy. Unless they have an agent who can work with what happened and provide options and alternatives, the company is simply going to have to spend more money.
2. Unlike personal insurance where there is a need for the life insurance and the sooner it is taken care of the better everyone feels, with business life insurance there is often a deadline and if that isn’t met, it can mean projects being delayed and acquisition possibilities being lost. When the life insurance agent or agency that is being used doesn’t have back up plans for when things don’t go as planned and a deadline is crashing in it can end up with critical opportunities being lost and projects being delayed costing the company huge amounts of money.
We recently had a CEO life insurance client who had been given a deadline to have a $3 million policy in force. Unfortunately he had been traveling and came down with a bad cold and upper respiratory infection. He went from his hotel to the hospital in the evening and was checked out, given medication and released. He was warned that it might be a good idea not to drive but he was very close to his hotel and, well, he got a citation for driving under the influence. No alcohol involved. In fact he didn’t even drink. This deadline was two months after he got the DUI. He tried several of his insurance buddies and was turned down because of how recent the DUI was so he turned to us and we were able to get a policy in force at a very reasonable rate. His buddies didn’t have multiple very good life insurance companies to choose from so when their company said no, they were stuck.
Within weeks of that we had another executive who had been declined for life insurance due to a positive CDT, an alcohol marker that can be indicative of a drinking problem. He tried several other agents before coming to us and they all told him that a positive CDT was an automatic decline even though the client insisted that he only occasionally had a glass of wine. One of the underwriters we work with takes exception to the absolute veracity of CDT results and was able to approve this automatically declined client and preferred life insurance rates.
If you’re in a business position where life insurance is required and/or required by a deadline, don’t step into the challenge with one of the good old agents that you’ve known for a long time unless they can assure you they have a back up plan. We have a back up plan in place that can provide the needed life insurance, up to $100 million of life insurance, approved and in force in 5 days if all other avenues fail. When companies call us and they are backed into a corner, we can use that option to keep business flowing, a finger in the dike if you will, until a more long term fix can be found. If you have questions or have a life insurance deadline looming, call or email us. We can help.
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