I need to get a policy for my 86 year old mother for reasonable premium.
Total Comments: 144
Posted: Wed Jul 01, 2009 11:40 pm Post Subject:
The mortality tables give a statistical average (actually it is much more complex then a simple average). Meaning it is the average mortality....meaning some people will live longer and some will live shorter.....this is the definition of standard risk. But I am not an acctuary or an insurance carrier so I do not know exactly what the mortality is for an 86 y/o at standard risk at Transamerica.
The mortality tables give the average mortality for everyone regardless of health. Underwriting allows the insurance company to charge people based upon their health. Since the insurance company can get rid of the unhealthy people, they will have mortality that is longer than average. I'm not sure why you are having a problem with this. I also don't know the mortality is for an 86 y/o at standard risk at Transamerica, but I'm smart enough to know that it has to be longer than 6 years.
Posted: Wed Jul 01, 2009 11:49 pm Post Subject:
We can see that our break even point between option 2 and 4 is in year 13 or age 98. This will well past life expectancy for an 86 y/o.
I don't know.....maybe I am missing something but the annuity maximization strategy seems to be the best option. (not to mention that i am feeling lazy so i assumed the CD is growing tax deferred...which it does not....so the true break even is probably past year 100).
You are missing a couple very important points.
1) After 6.5 years, the annuity is only kicking off $19,000 after tax and not $29,000. This won't be enough to guarantee the death benefit.
2) The death benefit at the premium that you are quoting is only guaranteed to age 100. A healthy 86 year old female has about a 10% chance of living to age 100. This would be $0. It's convenient to ignore this in the calculation.
Posted: Thu Jul 02, 2009 01:23 am Post Subject:
You have wrong information. The majority of 86 year old are not insurable at standard rates. The majority of 35 year olds will get better than standard.
You do not understand how carriers underwrite life insurance. Standard risk is NOT static. It is dynamic. think about it....you are trying to tell us that an average 35 y/o is in the same health as a standard 86 y/o. 86 and 35 each have there own STANDARD. that being said it is not relevant. I have already said that i assumed the 86 y/o female was standard.
Posted: Thu Jul 02, 2009 01:45 am Post Subject:
You are missing a couple very important points.
1) After 6.5 years, the annuity is only kicking off $19,000 after tax and not $29,000. This won't be enough to guarantee the death benefit.
This is not true.....do I really need to attach an illustrations? the SPIA will generate 29k for life. after principal has been repaid the client must pay taxes on the income. after income taxes the client will receive 19k a year for her life period.
Using this stream of income I can solve for guaranteed death benefit. If you don't believe me ask your IMO to run a Hancock illustration with that stream of premiums and see what they say. I get $191,235. till age 121.
or if you use Transamerica you can guarantee $320k to age 100 or $300k to age 107. your choice.......depends on how much risk your client wants to take.
So we take the first point that you said I missed "the premiums wont guarantee a policy". this is wrong....the premiums DO guarantee a policy.
and the 2nd point that you said I missed "you only guaranteed to age 100". So this point was not missed...it was intentional. But to be fair i runt the number to age 121.
Now to be completely fair i looked up the interest rate on a 5 year CD....turns out to be 3.6%. and I re-ran my previous number without the tax deferral and to age 121 (i am only showing to age 100).
Given that a standard 86 year old had a standard life expectancy of 6 years i think that the life option blows the other option away.
healthy 86 year old female has about a 10% chance of living to age 100
Also an 86 y/o female has a 4.8636% chance of living to age 100 not 10%
Posted: Thu Jul 02, 2009 10:58 am Post Subject:
You do not understand how carriers underwrite life insurance. Standard risk is NOT static. It is dynamic. think about it....you are trying to tell us that an average 35 y/o is in the same health as a standard 86 y/o. 86 and 35 each have there own STANDARD. that being said it is not relevant. I have already said that i assumed the 86 y/o female was standard.
Marpol, don't put words in my mouth. I never said or implied that a standard 86 year old is as healthy as a standard 35 year old. The 86 year old has one health issue that is already built into the mortality tables...old age.
An 86 year old who is slightly overweight and takes medication to control both their blood pressure and cholesteral and otherwise healthy will probably get standard just like a 76 year old, 66 year old...35 year old.
Allow me to repeat myself. Most 86 year old people can't get standard rates. I don't understand why you are having so much trouble understanding this.
Posted: Thu Jul 02, 2009 11:16 am Post Subject:
This is not true.....do I really need to attach an illustrations? the SPIA will generate 29k for life. after principal has been repaid the client must pay taxes on the income. after income taxes the client will receive 19k a year for her life period.
Using this stream of income I can solve for guaranteed death benefit. If you don't believe me ask your IMO to run a Hancock illustration with that stream of premiums and see what they say. I get $191,235. till age 121.
That is not the $320,000 that you were using.
or if you use Transamerica you can guarantee $320k to age 100 or $300k to age 107. your choice.......depends on how much risk your client wants to take.
So we take the first point that you said I missed "the premiums wont guarantee a policy". this is wrong....the premiums DO guarantee a policy.
and the 2nd point that you said I missed "you only guaranteed to age 100". So this point was not missed...it was intentional. But to be fair i runt the number to age 121.
So, you were intentionally being disingenuous with your numbers. Otherwise, why wouldn’t you show what happened at age 100? When I talk about guaranteeing a policy, I am talking about guaranteeing a policy until death. You obviously have a different definition of this.
Posted: Thu Jul 02, 2009 11:22 am Post Subject:
I did not mean to mis-state you. My apologies. I understand where you are coming from I just don't agree with your last statement that most 86 yo don't get standard. It was my understanding that standard for any age was the most commone risk class. Again I am not an underwriter so maybe I am wrong. I do have some contacts at a few carriers who I will call tomorrow to see how they actully do it. I will see what I can find out.
Posted: Thu Jul 02, 2009 11:22 am Post Subject:
I did not mean to mis-state you. My apologies. I understand where you are coming from I just don't agree with your last statement that most 86 yo don't get standard. It was my understanding that standard for any age was the most commone risk class. Again I am not an underwriter so maybe I am wrong. I do have some contacts at a few carriers who I will call tomorrow to see how they actully do it. I will see what I can find out.
Posted: Thu Jul 02, 2009 11:33 am Post Subject:
Given that a standard 86 year old had a standard life expectancy of 6 years i think that the life option blows the other option away.
Also an 86 y/o female has a 4.8636% chance of living to age 100 not 10%
You are getting all buggered up on this point. If we take the population of all 86 year old females, the life expectancy is 6 years. From that same population, the chance of living to age 100 is 4.86%.
What if we included men in the calculation. (Just guessing here) The life expectancy is 5 years and the chance of living to age 100 is 2.8%.
Why would I do that calculation? Isn't it meaningless since we are only talking about females? Yes, it is meaningless. By the same token, a calculation using all females is meaningless because that isn't the population that we are using. The population for our purposes is only 86 year old females who are healthy enough to get a standard rating for life insurance. With this population, the life expectancy is probably closer to 8 years with a 10% chance of living to age 100.
I notice how you have conveniently never responded to how a life insurance company can afford to give somebody a 15% return if they die at life expectancy. We both know that they can’t which is how we know that life expectancy isn’t 6 years for this population.
By the way, if you can turn a $200,000 lump sum into a $291,000 death benefit guaranteed for life, I don’t have a problem with this. This is a big jump from the $265,000 at the beginning of this conversation. Unfortunately, the odds are against an 86 year old getting approved standard.
Posted: Wed Jul 01, 2009 11:40 pm Post Subject:
The mortality tables give a statistical average (actually it is much more complex then a simple average). Meaning it is the average mortality....meaning some people will live longer and some will live shorter.....this is the definition of standard risk. But I am not an acctuary or an insurance carrier so I do not know exactly what the mortality is for an 86 y/o at standard risk at Transamerica.
The mortality tables give the average mortality for everyone regardless of health. Underwriting allows the insurance company to charge people based upon their health. Since the insurance company can get rid of the unhealthy people, they will have mortality that is longer than average. I'm not sure why you are having a problem with this. I also don't know the mortality is for an 86 y/o at standard risk at Transamerica, but I'm smart enough to know that it has to be longer than 6 years.
Posted: Wed Jul 01, 2009 11:49 pm Post Subject:
We can see that our break even point between option 2 and 4 is in year 13 or age 98. This will well past life expectancy for an 86 y/o.
I don't know.....maybe I am missing something but the annuity maximization strategy seems to be the best option. (not to mention that i am feeling lazy so i assumed the CD is growing tax deferred...which it does not....so the true break even is probably past year 100).
You are missing a couple very important points.
1) After 6.5 years, the annuity is only kicking off $19,000 after tax and not $29,000. This won't be enough to guarantee the death benefit.
2) The death benefit at the premium that you are quoting is only guaranteed to age 100. A healthy 86 year old female has about a 10% chance of living to age 100. This would be $0. It's convenient to ignore this in the calculation.
Posted: Thu Jul 02, 2009 01:23 am Post Subject:
You have wrong information. The majority of 86 year old are not insurable at standard rates. The majority of 35 year olds will get better than standard.
You do not understand how carriers underwrite life insurance. Standard risk is NOT static. It is dynamic. think about it....you are trying to tell us that an average 35 y/o is in the same health as a standard 86 y/o. 86 and 35 each have there own STANDARD. that being said it is not relevant. I have already said that i assumed the 86 y/o female was standard.
Posted: Thu Jul 02, 2009 01:45 am Post Subject:
You are missing a couple very important points.
1) After 6.5 years, the annuity is only kicking off $19,000 after tax and not $29,000. This won't be enough to guarantee the death benefit.
This is not true.....do I really need to attach an illustrations? the SPIA will generate 29k for life. after principal has been repaid the client must pay taxes on the income. after income taxes the client will receive 19k a year for her life period.
Using this stream of income I can solve for guaranteed death benefit. If you don't believe me ask your IMO to run a Hancock illustration with that stream of premiums and see what they say. I get $191,235. till age 121.
or if you use Transamerica you can guarantee $320k to age 100 or $300k to age 107. your choice.......depends on how much risk your client wants to take.
So we take the first point that you said I missed "the premiums wont guarantee a policy". this is wrong....the premiums DO guarantee a policy.
and the 2nd point that you said I missed "you only guaranteed to age 100". So this point was not missed...it was intentional. But to be fair i runt the number to age 121.
Now to be completely fair i looked up the interest rate on a 5 year CD....turns out to be 3.6%. and I re-ran my previous number without the tax deferral and to age 121 (i am only showing to age 100).
Given that a standard 86 year old had a standard life expectancy of 6 years i think that the life option blows the other option away.
Net to heirs
Year Age Option 1 Option 2 Option 3 Option 4
1 86 $200,000 $204,824 $265,000 $291,235
2 87 $200,000 $209,764 $265,000 $291,235
3 88 $200,000 $215,627 $265,000 $291,235
4 89 $200,000 $221,385 $265,000 $291,235
5 90 $200,000 $227,386 $265,000 $291,235
6 91 $200,000 $233,521 $265,000 $291,235
7 92 $200,000 $239,830 $265,000 $291,235
8 93 $200,000 $246,307 $265,000 $291,235
9 94 $200,000 $252,960 $265,000 $291,235
10 95 $200,000 $259,792 $265,000 $291,235
11 96 $200,000 $266,809 $265,000 $291,235
12 97 $200,000 $274,015 $265,000 $291,235
13 98 $200,000 $281,416 $265,000 $291,235
14 99 $200,000 $289,016 $265,000 $291,235
15 100 $200,000 $296,822 $265,000 $291,235
Posted: Thu Jul 02, 2009 01:50 am Post Subject:
healthy 86 year old female has about a 10% chance of living to age 100
Also an 86 y/o female has a 4.8636% chance of living to age 100 not 10%
Posted: Thu Jul 02, 2009 10:58 am Post Subject:
You do not understand how carriers underwrite life insurance. Standard risk is NOT static. It is dynamic. think about it....you are trying to tell us that an average 35 y/o is in the same health as a standard 86 y/o. 86 and 35 each have there own STANDARD. that being said it is not relevant. I have already said that i assumed the 86 y/o female was standard.
Marpol, don't put words in my mouth. I never said or implied that a standard 86 year old is as healthy as a standard 35 year old. The 86 year old has one health issue that is already built into the mortality tables...old age.
An 86 year old who is slightly overweight and takes medication to control both their blood pressure and cholesteral and otherwise healthy will probably get standard just like a 76 year old, 66 year old...35 year old.
Allow me to repeat myself. Most 86 year old people can't get standard rates. I don't understand why you are having so much trouble understanding this.
Posted: Thu Jul 02, 2009 11:16 am Post Subject:
This is not true.....do I really need to attach an illustrations? the SPIA will generate 29k for life. after principal has been repaid the client must pay taxes on the income. after income taxes the client will receive 19k a year for her life period.
Using this stream of income I can solve for guaranteed death benefit. If you don't believe me ask your IMO to run a Hancock illustration with that stream of premiums and see what they say. I get $191,235. till age 121.
That is not the $320,000 that you were using.
or if you use Transamerica you can guarantee $320k to age 100 or $300k to age 107. your choice.......depends on how much risk your client wants to take.
So we take the first point that you said I missed "the premiums wont guarantee a policy". this is wrong....the premiums DO guarantee a policy.
and the 2nd point that you said I missed "you only guaranteed to age 100". So this point was not missed...it was intentional. But to be fair i runt the number to age 121.
So, you were intentionally being disingenuous with your numbers. Otherwise, why wouldn’t you show what happened at age 100? When I talk about guaranteeing a policy, I am talking about guaranteeing a policy until death. You obviously have a different definition of this.
Posted: Thu Jul 02, 2009 11:22 am Post Subject:
I did not mean to mis-state you. My apologies. I understand where you are coming from I just don't agree with your last statement that most 86 yo don't get standard. It was my understanding that standard for any age was the most commone risk class. Again I am not an underwriter so maybe I am wrong. I do have some contacts at a few carriers who I will call tomorrow to see how they actully do it. I will see what I can find out.
Posted: Thu Jul 02, 2009 11:22 am Post Subject:
I did not mean to mis-state you. My apologies. I understand where you are coming from I just don't agree with your last statement that most 86 yo don't get standard. It was my understanding that standard for any age was the most commone risk class. Again I am not an underwriter so maybe I am wrong. I do have some contacts at a few carriers who I will call tomorrow to see how they actully do it. I will see what I can find out.
Posted: Thu Jul 02, 2009 11:33 am Post Subject:
Given that a standard 86 year old had a standard life expectancy of 6 years i think that the life option blows the other option away.
Also an 86 y/o female has a 4.8636% chance of living to age 100 not 10%
You are getting all buggered up on this point. If we take the population of all 86 year old females, the life expectancy is 6 years. From that same population, the chance of living to age 100 is 4.86%.
What if we included men in the calculation. (Just guessing here) The life expectancy is 5 years and the chance of living to age 100 is 2.8%.
Why would I do that calculation? Isn't it meaningless since we are only talking about females? Yes, it is meaningless. By the same token, a calculation using all females is meaningless because that isn't the population that we are using. The population for our purposes is only 86 year old females who are healthy enough to get a standard rating for life insurance. With this population, the life expectancy is probably closer to 8 years with a 10% chance of living to age 100.
I notice how you have conveniently never responded to how a life insurance company can afford to give somebody a 15% return if they die at life expectancy. We both know that they can’t which is how we know that life expectancy isn’t 6 years for this population.
By the way, if you can turn a $200,000 lump sum into a $291,000 death benefit guaranteed for life, I don’t have a problem with this. This is a big jump from the $265,000 at the beginning of this conversation. Unfortunately, the odds are against an 86 year old getting approved standard.
Add your comment