Welcome to the Estate Planning Council of Greater Miami Due Diligence in Recommending the Correct Life Insurance Policy

1
Welcome to the Estate Planning Councilof
Greater MiamiDue Diligence in Recommending the
Correct Life Insurance Policy

• Presented by
• Michael W. Halloran, AEP, CLU , ChFC , CFP
• November 11, 2009

2
Establishing the Need for Coverage
3
Need

• Temporary need term insurance

• Permanent Continuing need

4
Term Coverage

• Annual Renewable
• 10-20-30-Year Level
• Renewable
• Convertible
• Waiver of Premium

5
Permanent or Continuing Need

• Whole Life
• Participating
• Portfolio
• New Money
• Variable Life
• Mortality and Expense Cost

• Universal Life
• No guarantees
• Secondary guarantees
• Mortality Table
• Company Financial Ratings
• Guarantees and Problems
• Purpose of Cash
• Variable Universal Life
• Investment Risk

6
Amount of Coverage

• Estate
• Business
• Charitable

7
Understanding the Policy Illustration

• Pro forma
• Product Illustration
• NAIC Illustration
• Product enhancements (non-guaranteed)
• Current experience
• Past history
• Current scale vs. portfolio method
• Third party references

8
Professional Liability and Disclosure

• Who are you liable to?
• Policyowner
• Insured
• Beneficiaries
• What happens if your recommendations are wrong?
• How can you limit your liability?

9
Rating Agencies

• A. M. Best
• Fitch
• Standard Poors
• Moodys

10
Standard Poors www. standardandpoors.com Moodys www.moodys.com Fitch www.fitchratings.com A.M. Best www.ambest.com
Superior AAA 13 AAApi 0 Exceptional Aaa 13 Highest AAA 9 Superior A 28 A 82
Excellent AA 11 AA 50 AApi 2 AA- 32 Excellent Aa1 13 Aa2 20 Aa3 37 Very High AA 27 AA 40 AA- 19 Excellent A 49 A- 34
Good A 8 A 14 Api 17 A- 10 Good A1 9 A2 8 A3 8 High A 15 A 9 A- 4 Very Good B 4 B 8
Adequate BBB 7 BBB 0 BBBpi 2 BBB- 1 Adequate Baa1 5 Baa2 0 Baa3 2 Adequate BBB 1 BBB 1 BBB- 1 Vulnerable/Fair B 0 B- 0
Vulnerable BB to R 5 Not Rated 56 Weak Ba1 to C 1 Not Rated 116 Non-investment grade BB to CCC- 0 Not Rated 97 Vulnerable C to F 0 Not Rated 18
11
Rates

• Mortality
• Expenses charges
• Interest
• Investing long
• Investing short

12
Thank You!

• Questions?