Let's look at some condo financing considerations...

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It’s Completely About the Derived Market –

FNMA along with FHLMC (Fannie Mae and Freddie Mac) are the most important buyers of mortgage loans within the US consequential mortgage market. In the role of, they set up risk-based standards for loans so as to can take place sold to them through lenders. These standards go beyond borrower qualification – they extend to property type and apply. If individual mortgages go through these standards, they are referred to as conforming loans. If an individual loan isn’t meeting the requirements as well as therefore can’t be sold to these GSEs (Government Sponsored Enterprises), the lender must either hold that loan within its own portfolio of investments or bundle it into commercial Mortgage-Backed Securities (MBSs). Lenders choose selling their loans to the GSEs therefore they be able to free up then re-lend that money. It must be noted at this time that portfolio loans not sold to FNMA otherwise FHLMC usually take higher interest rates toward the borrower.

So… what will this have to do with Florida condominiums? Well, the standards for eligible developments involve appraisal of the monetary health, structural integrity, legal composition, and secure management of the property.

If a structure or development doesn’t meet FNMA standards, then a loan prepared on an individual

residence unit in it resolve be non-conforming.

Lenders apply FNMA’s guidelines to determine a loan’s eligibility for being sold to a GSE at the secondary market. Nearly of the general condominium property variables include:

* Are any sections of the estate used as a hotel or

timeshare?

* Has control of the HOA been twisted over towards unit owners?

* Is there any pending legal action not in favor of the HOA?

* Does the structure or development include some

commercial space?

* Is the property a conversion or was it purpose-built

such as a condominium?

* Does the property hold sufficient insurance coverage?

* Does the HOA account have sufficent funds for projected

investment expenditures with late repair?

* Are over 10% of the units owned by one being or

entity?

* Are any HOA dues payments from unit owners overdue?

These are clearly an understanding of the standards incorporated in the FNMA secondary market eligibility framework for condominiums. There are also types of properties that are specifically not entitled and will not even be reviewed. Based on the type, size, location, and legal structure of the project, eligibility and warrantability be able to get rather involved. If you’re well-known by means of financial market investment terms, you could say that the lender-requested independent property appraisal is similar to expert analysis, while condominium project eligibility is similar to fundamental analysis.

What this means to us in the real estate business is that lenders now want a satisfactory condo eligibility analysis to be submitted including the loan application. There are a few another methods that FNMA offers for lenders to resolve condo

eligibility. These include:

* Limited Review

* Condo Project Manager (CPM) Expedited Review

* Lender Full Review

* FNMA Project Eligibility Review Service (PERS)

* Special Approval Designation (SAD) which applies

only in Florida

The procedure used is determined through variables such as whether the development is new or already established, along with

certain combinations of the other variables we mentioned above. Further, FNMA has set maximum LTVs (loan-to-value ratios and

occupancy or use restrictions for condo loan eligibilty. Down payments, rates, and terms are all influenced by the information gathered during the eligibility review.

Loans for purchases in non-qualifying buildings or improvements can be rather difficult otherwise even impossible to find. If available, they will hold extra restrictive terms (that means higher rates) because they will end up within the lender’s own portfolio, tying up that money for an extended period. On the other hand, more attractive terms are available for condo or townhouse/villa purchases in well-managed, financially strong buildings or developments because those loans would be conforming also eligible to be sold on the secondary market. Realtors® should also be aware that similar eligibility aspects come into cooperate with mortgage financing for properties in a Planned Unit Development (PUD).

For further discussion on qualifying standards, GSEs, available loan programs, finance terms, and a lot more…check out my website www.YourMortgageSolutionsNow.com, then call or send me an e-mail to discuss your particular deal.

Allow me strengthen the trust your client

has placed in you!

Wwww.YourMortgageSolutionsnow.com

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Let's look at some condo financing considerations...

Add this to your DOL checklist: health, LTC costs in retirement

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As the DOL rule is phased in, advisors will need to factor healthcare and long-term care into clients’ retirement plans, says Ron Mastrogiovanni (photo: ThinkStock),

Fast-rising health care costs are a growing concern for retirees. As noted in this space on June 10, a report from HealthView Services, a producer of health care cost projection software, pegged health care costs for a 65-year-old couple retiring today at $288,000 — no small chunk of change.

HealthView Services Founder and CEO Ron Mastrogiovanni turns in this installment to two other factors that advisors must incorporate into their retirement planning for clients: (1) the disproportionate impact of long-term care costs on a surviving spouse; and (2) the Department of Labor’s new fiduciary rule.

Related: Long-Term Care News & Trends

If advisors are to meet the DOL rule’s best interest standard, asserts Mastrogiovanni, then estimates of health care and long-term care costs in retirement — as well as tax-advantaged insurance products needed to minimize those costs and taxable income — will need to become part and parcel of a retirement income plan. The following are interview excerpts.

Related: Study: Millennials often underestimate health care costs

LHP: Based on your research, what are the implications of rising health care costs for women? How does this impact compare with that for men?

Mastrogiovanni: I put together a case study involving a couple: a 60-year-old man expected to live to age 87; and a 58-year-old women with a life expectancy of age 89. Their health care costs thus must account for a two-year difference in age, and an additional two years of longevity.

For the wife, that means she will be responsible for $104,000 more in health care expenses than her husband over the 4 years.

Additionally, the couple will require long-term care, which varies in cost by state. Assuming an industry average of 1.5 years of care, he will be responsible for an additional $181,000 in LTC expenses in New York State or $71,000 in Texas.

His wife will need on average 2.5 years of long-term care, yielding a price tag of $302,000 or an additional $121,000 in New York compared to her husband; in Texas the difference in cost between husband and wife would be $47,000. These figures are a big shock that people need to address in retirement.

See also: A tale of woes: boomers trying to build a retirement nest egg

LHP: Another potential shock in retirement for a surviving spouse, I understand, is the tax bill. Can you talk about that?

Mastrogiovanni: Yes. Assuming the wife receives income from three sources — her husband’s pension, Social Security and required minimum distributions from an IRA — she could be pushed into a higher income tax bracket at her husband’s passing. Using industry averages, our case study pegs the additional cost at $50,000 in Medicare tax surcharges for the wife. So a surviving spouse ends up with additional expenses and financial pressures that, typically, a husband who predeceases her doesn’t have to address.

Related: These 5 charts predict what retirees will pay for health care over the next 10 years

LHP: In respect to long-term care, could the cost of the couple in your case study be lowered by, say, using a home attendant in lieu of a nursing home?

Mastrogiovanni (pictured at right): Perhaps at the outset. Initially, someone may need a visiting nurse to stop by weekly and an aid twice weekly to handle basic chores, such as buying groceries or washing clothes. As time goes on, however, the need for these services increases; at a certain point, the retiree may decide a home attendant is necessary 3 days per week, 8 hours a day.

But if someone needs help for that length of time then, I’m sorry to say, he or she really need 24×7 care; 3×8 care is not realistic. And, in most cases, 24×7 home care is more expensive than a nursing home.

Also to factor in is the cost of administering drugs. If my parents were in a nursing home, Medicare would cover certain medications. That’s not the case if the drugs were administered at home. So there are disadvantages for people receiving home care.

Retirees might favor, alternatively, an assisted living facility, such as a condo, an option generally only available to more affluent people who don’t require 24×7 care. But these people still have to maintain their home, have the grass cut and pay property taxes. You have to add in these additional expenses when comparing assisted living facilities to other end-of-life options.

Related: How to personalize health care costs in retirement

LHP: Understood. Let’s turn to the Department of Labor’s new fiduciary rule. What are the rule’s implications for agents and advisors endeavoring to develop a retirement income plan as it relates health care and long-term care costs?

Mastrogiovanni: Health care, housing, transportation, food and discretionary expenses are not mentioned in the 1,000-plus pages of the DOL’s conflict-of-interest regulations. The rule is very general.

What’s clear is this: To act in the best interests of the client — a key requirement of the rule — you have to go through a thorough planning process. Historically, retirement planning hasn’t focused much on health care costs.

I believe that must change for advisors held to a best interest standard. It will no longer be enough to bundle all fixed expenses and use, say, an 80 percent income replacement ratio when calculating how much an individual needs to save for retirement. Advisors will have to segregate assets and savings to cover specific expenses, particularly fixed expenses.

And health care is one of the largest, if not the largest expense, we’ll all face in retirement. So as the rule is phased in, we think the planning process will change.

Advisors will develop specific plans and product portfolios to address different needs in retirement, among them health care and long-term care costs.

Related: Think what you could do with half a million dollars in retirement

LHP: Is this planning analogous to using “buckets” for different phases of retirement, where each bucket funds a particular period and fixed or discretionary expenses?

Mastrogiovanni: Yes; the long-term care component will typically take place in the last two years of one’s life. But advisors will need to plan more accurately, based on the client’s life expectancy. If, using our hypothetical couple again, the husband will live to age 87, then he’ll need to fund LTC expenses from ages 86 to 87.

To that end, an advisor can add to the distribution plan a retirement income bucket specifically focused on long-term care, the bucket funded with an LTC rider on a linked-benefit life insurance policy or annuity. The client could also opt to self-insure part of the LTC expenses.

Also to factor in are health care costs, which are rising at a rate faster than general inflation. These expenses become a second bucket — potentially funded with mutual funds, a health savings account or Roth IRA — in the product mix.

Because of income and surcharge tax implications —  a 3.8 percent Medicare surtax is levied on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) above $200,000 for individuals, $250,000 for couples filing jointly — the investment vehicle is critically important. It could increase or decrease the client’s retirement assets by tens or even hundreds of thousands of dollars.

Related: The scary facts about health care costs in retirement

LHP: As the DOL rule is phased in, do you foresee greater use of LTC riders on linked-benefit life insurance products or annuities?

Mastrogiovanni: Many advisors believe they’ll be selling fewer annuities under the DOL rule. But when you’re looking at health care specifically, there’s a good reason to purchase a non-qualified annuity. For example: as part of a qualified plan rollover.

Because of its tax-advantaged status — the investment can grow on a tax-deferred basis; and only the portion of distributions representing earnings are taxed — the client’s MAGI can be minimized. And a lower MAGI means less paid in income and Medicare surtaxes.

Tax-advantaged life insurance also has a role to play here. Advisors can explore with clients not only permanent life products’ estate tax benefits, but also how the cash value can be used to pay for health care and long-term costs. Because a policyholder can make tax-free withdrawals against the product’s cash value — up to cost basis and, above this threshold, in the form of loan —distributions don’t fall under MAGI.

The ability to optimize discretionary income in retirement should be a big motivator for more affluent investors to look at life insurance.

Related: Analyst: Individual health rates likely to jump in 2017

LHP: What about longevity insurance: annuities that typically guarantee a lifetime income stream starting at 85? How do these products fit into a retirement income portfolio?

Mastrogiovanni: This is another interesting option for retirees. As the products are not subject to RMD rules applicable to IRAs — required minimum distributions that, again, can increase MAGI and therefore the Medicare surtax — it should be considered as part of a retirement income plan. At the time of payout, the product may be used to cover general living expenses, health care costs or other discretionary expenses.

 

Related:

Health care a greater concern among more conservative investors

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Add this to your DOL checklist: health, LTC costs in retirement

Mortgage Basic Questions Answered

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Mortgage Basic Questions Answered.

Why Pre-Qualification is Important

It’s valuable to visit with a mortgage professional early, even if you haven’t decided the kind of house to search for. What for? Perhaps it’s difficult to understand how they can help even before you begin to calculate your offer.

Pre-Qualify

A mortgage professional will help determine how much of a mortgage loan you can afford and how much money you can borrow, by walking you through pre-qualifying. This process outlines your financial situation – your debts, income, career, and down payment money, among other things; it’s short and basic.

You will receive a Pre-Qualification Letter if you qualify, which says that the mortgage company is confident you’ll qualify for a predetermined amount of mortgage dollars.

Pre-Qual Power

Some benefits open to you after you’ve found your next house, and have achieved pre-qualification power. First, it lets you know how much you are able to offer. Being pre-qualified also will make your offer look even better to the home seller, as if you were bringing them a suitcase of cash! They need not worry that that they’re wasting their time if you do not be able to qualify for a big enough mortgage loan. The seller won’t worry if he can count on you to qualify for your mortgage in the amount you’ll need. Your qualifying for your needed mortgage loan amount won’t cause them concern. They have a virtual guarantee that they can trust your buying power. If you are making a down payment on our home of less than 20 percent,

you will most likely have to get Private Mortgage Insurance (or PMI).

It ensures that the lender is guaranteed, by the mortgage insurer,

80 percent of the loan if you default.

The insurance premium amount varies by the loan to value of the house and type of loan.

Why are some rates shown as a percentage and as an APR too?Why are some rates shown as a percentage and as an APR too?

Why are some rates shown as a percentage and as an APR too?

The Annual Percentage Rate is what you will actually end up paying

in addition to the principal. It wraps up the interest, points and fees

in an effective annual rate. (When a lender quotes you a rate,

it will be for interest only, so ask to see the APR.)

As above, when you are using the APR to compare loans,

make sure you are comparing apples to apples.

You need the same loan from different lenders to make the comparison work.

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Mortgage Basic Questions Answered

VA Streamline Refinance Rates

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VA Streamline Refinance Rates | 866-569-8272

Today Eric talks about VA streamline refinance rates. If you are thinking about refinancing your existing VA home loan call us today at 866-569-8272 to speak with a VA home loan specialist. Low VA Rates has some of the best VA Streamline refinance rates in the industry.  We are VA streamline loan experts and are proud to serve our Military service members.

Call us now at 866-569-8272 or visit us at https://www.lowvarates.com to learn more. 

 

Low VA Rates

https://www.lowvarates.com

https://militarymortgagecenter.com/

Address: 384 S 400 W, Lindon, UT 84042

Phone:(866) 569-8272

Hours: Open today · 6:00 AM – 8:00 PM

 

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VA Streamline Refinance Rates

Renovation Loans | Houston Mortgage Lender | Mark Zachary 832-418-0883

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Watch this short video explaining how the Interlinc Mortgage Services renovation lending program works. Buy a home, get bids on renovation work and close one loan for the entire transaction. Replace carpet, tile and any flooring. Repaint your home inside and out. Add a bathroom or remodel an existing one. Add a patio or deck out back. Make a home your own by purchasing with an Interlinc Mortgage Renovation Loan. Call Mark Zachary with questions. http://youtu.be/2tjgKIE8r0s

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Renovation Loans | Houston Mortgage Lender | Mark Zachary 832-418-0883

Where the sandwich generation lives [Infographic]

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Multigeneration households are more prevalent in California than in the Midwest. (Illustration: Trulia)

Multigeneration households are on the rise due to economic factors and ethnic traditions.

San Francisco-based online real estate company Trulia studied the trends surrounding households with three or more generations — the sandwich generation — sharing a home in the largest 100 markets in the United States.

Many markets with the largest percentage of three-generation households are located in California, although Long Island, New York; El Paso, Texas; Honolulu; and Miami also have a substantial concentration of multigeneration households. Conversely, in the Midwest market of Madison, Wisconsin, only 2 percent of households have three or more generations living under one roof.

See the infographic below for more details about the distribution of multigeneration households in the United States:

See also:

Who is the Sandwich Generation? [infographic]

How to help the Sandwich Generation find a financial balance [infographic]

The unique struggle of the sandwich generation

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Where the sandwich generation lives [Infographic]

No-worry selling — solicit straight to win big

Selling ethically from the start can help you avoid problems down the road.

Should solicitation “tricksters” be named to the Sales Hall of Shame? Methinks they should because advisors who play games in order to gain appointments hurt their prospective customers, while smearing the good name of competitors who sell straight. And they’re not doing themselves any favors, either.

Adopting a “no-worries” solicitation style makes infinitely more business sense. It means you’ll have fewer regulatory complaints or client lawsuits stemming from dashed initial expectations. It also prevents E&O insurance claims, which can cause problems later if you need to apply for a new coverage. And you literally will sleep easier at night, knowing you scored appointments on the basis of your legitimate selling skills, rather than your ability to weasel past people’s defenses.  

Problem is, many advisors fail to make the connection between a “no-worry” solicitation style now and unhappy, litigious clients later. Perhaps they think it’s OK to trick their way into a meeting as long as they come clean during the first meeting. Wrong!

In fact, you only have one shot to make an ethical impression. When prospects agree to meet with you, but then realize within minutes that you lied or hid a material fact in order to get the interview, it’s game over. Nothing you can say or do from this point forward will convince them to trust you. Now, they may still buy from you, but they will always have nagging doubts about your integrity, which will limit cross sales and referrals.

So what does a no-worry solicitation style look like? Not surprisingly it depends on both ethical values and compliant behaviors. Ethical values are implicit in activities such as:

• Avoiding fear-based appeals in your initial approach to prospects.



• Never hiding any material fact about who you are or what you’re selling.



• Never exaggerating the features and benefits of a product in a telemarketing call or direct mailer.

Compliance with relevant state and federal regulations is equally important. Although there are too many compliance rules relating to solicitation to discuss fully in this space, here are a few key points to consider. As always, check with your compliance officer for complete details.

1. Don’t lure a prospect to an interview by misrepresenting what you sell or who you are, either in print or over the phone.

2. Make sure your telemarketing complies with the Telephone Consumer Protection Act and the Federal Trade Commission’s Do Not Call rules.

3. Make sure your advertising materials are accurate and truthful, fair and balanced, and approved by your FMO, broker-dealer or RIA. 

4. If you do e-mail marketing, give recipients the opportunity to opt out of future mailings, while making clear that your message is an advertisement. Also never use false or misleading e-mail headers.

5. If you use lead-generation firms, make sure they don’t use deceptive methods in order to secure prospect leads. Watch for false statements on direct mailers regarding government programs and/or sponsorship.

6. If you conduct seminars, disclose your role as an insurance agent and your company affiliation(s), always identify what you’re selling, and do not offer “free” reports or analyses with an exaggerated list price when no one ever pays that price.

Put ethical values and compliance prowess together and what do you get when it comes to solicitation? Better closing ratios, less friction in the sales process, higher persistency and account loyalty, and a higher income level. What’s not to like? 

In short, when you score appointments fairly and legitimately, you give yourself a powerful leg up in terms of your ability to close sales and to build a successful — and sustainable — business. For the life of me, I can’t see how anyone would prefer to play tricks instead. 

See also:

No-worry selling — the sleep aid for sales superstars

Following the yin and yang of ethics and compliance

Ethical sales practices are good for more than your conscience

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No-worry selling — solicit straight to win big

Hartford’s Q2 2016 earnings down 48 percent from Q2 2015

Hartford CEO Christopher Swift attributed the earnings decline in part to “increasingly aggressive” competition and pressure on investment income from lower interest rates (photo: ThinkStock).

The Hartford (HIG) reported net income of $216 million in second quarter 2016 ended June 30, a decrease of $197 million from second quarter 2015, principally due to lower P&C underwriting results and lower net investment income.

Property and casualty (P&C) underwriting losses deteriorated $159 million, after-tax, compared with second quarter 2015, largely due to higher unfavorable PYD for the personal lines automobile and run-off asbestos and environmental (A&E) lines, higher catastrophe losses and lower current accident year Personal Lines automobile results.

Related: Tidal wave of insurance cash pointed toward junk bonds

Net investment income declined $40 million, after-tax, compared with second quarter 2015 primarily due to a $35 million, after-tax, decline in investment income from limited partnerships and other alternative investments (LPs). These items, in addition to a $48 million tax benefit in second quarter last year, were the principal drivers of the decrease in core earnings from $389 million in second quarter 2015 to $122 million in second quarter 2016.

Second quarter 2016 net income per diluted share was $0.54, a decrease of 44 percent compared with net income per diluted share of $0.96 in second quarter 2015 due to the decrease in net income slightly offset by fewer shares outstanding. Second quarter 2016 weighted average diluted common shares outstanding declined 7 percent from second quarter 2015 as a result of the company’s equity repurchases over the last year. Second quarter 2016 core earnings per diluted share decreased 66 percent to $0.31 compared with $0.91 in second quarter 2015.

“Although many of our segments continued to generate solid results, the second quarter bottom line was disappointing, principally due to personal lines auto, P&C, other operations, asbestos and environmental,” said The Hartford’s Chairman and CEO Christopher Swift. “While underlying margins remain strong in commercial lines and group benefits, competition is increasingly aggressive and we continue to feel pressure on investment income due to lower interest rates.”

The Hartford’s President Doug Elliot added, “Commercial Lines had a strong quarter as we remain intensely focused on maintaining underwriting discipline. Group Benefits had slightly higher life severity, but we remain pleased with overall margins and results.

In Personal Lines, adverse auto liability claims experience has contributed to approximately 5 points of deterioration in our estimate of underlying 2016 auto margins. As a result, our outlook for the 2016 personal lines combined ratio before catastrophes and prior year development has increased to a range of 93.0 to 94.0.”

Swift concluded, “Looking forward, we expect the environment to remain challenging. Our primary objectives are to maintain margins in commercial lines and group benefits and to improve personal lines results.

We remain confident that we are taking the right approach in this environment, emphasizing underwriting discipline over growth,” Swift added. “With our strong capital generation and solid balance sheet, we have the financial flexibility to invest for the future in order to continue to strengthen our franchise and to create long-term shareholder value.”

Related:

Insurance regulators respond to ongoing low interest rates

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Hartford’s Q2 2016 earnings down 48 percent from Q2 2015

Wells Fargo faces U.S. probe over soldiers' car seizures, report says

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Wells Fargo is facing a U.S. investigation into whether it improperly repossessed cars owned by members of the military, two people with knowledge of the probe told Bloomberg.

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Wells Fargo faces U.S. probe over soldiers' car seizures, report says

Fed’s Williams: Two rate increases still possible in 2016

Federal Reserve Bank of San Francisco President John Williams said a decision on raising interest rates again will be “data-dependent” (photo: ThinkStock).

(Bloomberg) — Federal Reserve Bank of San Francisco President John Williams played down a “low” reading on second-quarter U.S. growth and said the economy could still warrant as many as two interest-rate increases this year — or none.

“There’s definitely a data stream that could come through in the next couple of months that I think would be supportive of two rate increases,” Williams told reporters Friday after speaking in Cambridge, Massachusetts. “There’s data that we could get that wouldn’t be supportive of that — it could be one, maybe, or none. Time will tell.”

Related: Fed’s mission is accomplished. So why no change?

Williams was the first Fed official to speak publicly since policy makers held interest rates steady on Wednesday for the fifth straight time. The Fed was slightly more upbeat about the U.S. economy in a statement released after its two-day meeting, taking a step toward an increase later this year without signaling how soon a move might come.

Chair Janet Yellen and her colleagues have been watching for evidence of how headwinds from abroad, including fallout over Britain’s decision to leave the European Union, will affect U.S. hiring and progress in lifting inflation toward their goal of 2 percent.

Data released earlier on Friday by the U.S. Commerce Department showed the economy expanded less than forecast in the second quarter, while the Fed’s preferred gauge of price pressures excluding food and energy prices rose 1.7 percent annualized.

“The GDP number for the second quarter was low,” said Williams, who isn’t a voting member of the policy-setting Federal Open Market Committee this year. “Final sales actually looked pretty good,” though, and “a lot of the second-quarter weakness, part of it was really inventory swings.” He also said that the inflation data “was more or less what I had been expecting,” while the effects on the U.S. economy from the Brexit vote appeared to be “very modest.”

Gradual Tightening

The U.S. central bank has been on hold since it raised its target for the federal funds rates by a quarter-point in December to 0.25 percent to 0.5 percent, ending seven years of near-zero rates. Its most recent forecasts, released in June, showed that the median estimate of policy makers was for two more quarter-point rate increases this year, though six of the 17 officials submitting projections saw only one move.

“It makes sense to continue on the process of the gradual removal of accommodation,” said Williams. “My personal view is it makes sense, assuming the data will support that, to . We’ll get a couple more employment reports, more data on inflation before our next meeting.”

The FOMC next meets Sept. 20-21. Yellen will also have an opportunity to discuss her sense of the economy’s progress when she speaks on Aug. 26 at the Kansas City Fed’s annual policy symposium in Jackson Hole, Wyoming.

Related: 

Gross says negative rates are like ‘supernova’ that will explode 

Insurance regulators respond to ongoing low interest rates 

Copyright 2016 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Fed’s Williams: Two rate increases still possible in 2016

Futurity First Financial acquires nationwide annuity IMO

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New York City-based M3 Financial will bolster FFFC’s distribution capabilities. (Photo: iStock)

Independent insurance distribution company Futurity First Financial Corp. has acquired M3 Financial, a nationwide annuity indepedent marketing organization based in New York City.

Founded in 2007 by Mike Bartolotta, M3 Financial focuses on annuity and life insurance distribution, particularly fixed and fixed indexed annuities. Bartolotta will remain with the company as president of M3 Financial.

FFFC said the acquisition enhances its capabilities in all distribution channels, especially the financial advisory/broker-dealer channel, where fixed and fixed indexed annuities are growing in use for diversified retirement planning. The acquisition is the second this year for FFFC as it looks to broaden its market position in fixed annuity and life insurance distribution.

“We are thrilled to have M3 as part of the FFFC network of companies,” said Mike Kalen, CEO of FFFC. “Their passion for innovation and helping advisors position fixed and fixed indexed annuities as part of an overall retirement plan is clear and compelling. Their New York City presence gives us a huge market advantage with registered reps, broker-dealers and RIAs who are increasingly using fixed and fixed indexed annuities as part of their retirement planning with their clients. M3 now gives FFFC a sales and service presence in every major region in the United States.” 

FFFC employs 140 employees in seven offices. In addition to M3 Financial, its subsidiaries include Dressander|BHC and Imeriti Financial Network.

See also:

DOL 101: The fiduciary rule’s impact on IMOs

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Futurity First Financial acquires nationwide annuity IMO

Tackling 2 top retirement issues: What clients need to know

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Rising health care costs could delay or prevent prospects and clients from retiring, writes Van Mueller (photo: ThinkStock).

There are two challenges that must be considered to build a successful retirement for your prospects and clients: (1) increasing longevity and (2) increasing costs.

First, we must plan for increasing longevity. If your clients know for certain they will retire at age 65 and die at age 70, then planning for retirement is easy. But clients could retire at age 65 and live to age 95 or beyond.

Related: When teaching clients, repetition and questions are key

That’s a different endeavor to plan for. Retirees must find a way to guarantee income during retirement without experiencing losses, and this must be achieved in a volatile investment climate that also provides zero or even negative interest rates for long periods of time.

Rising life exptectancies

With Americans living longer than ever before, the longevity issue will also weigh on the fundamental programs that people over age 65 rely on as a safety net for income and health care. Among them:

Social Security

When Social Security began in 1925, the life expectancy of an American was 62 years. The creators of the program never conceived that Social Security would pay benefits for 20 or 30 years or more. There are not enough people paying into Social Security to support those who are receiving benefits.

Medicare

When Medicare began in 1965, the life expectancy of an American was 70 years. The designers of the program did not realize that providing access to the quality healthcare that Medicare provides would continue to lengthen life spans, but it did.

Medicare also continued to increase in cost. As a result, entitlements, defense and interest on the debt will consume all federal revenues by 2019. By 2023, federal revenues will only be enough for entitlements and interest on the debt.

We will need to make adjustments to these programs soon. And you should make sure that your clients are prepared and ready.

Related: Covering health care costs in retirement: tools you can use 

Rising pre- and post-retirement costs

Second, we must plan for increasing costs both before and after retirement, particularly health care costs.

Before retirement

Rising health care costs could delay or prevent prospects and clients from retiring, as these costs devour money to set aside for retirement. The Milliman Medical Index began issuing survey results on the average cost of health care for U.S households in 2001.

Last year, average health care cost for a family of four was $24,671. The results this year show an increase to almost $26,000. The study also shows that health care costs have tripled since 2001.

Related: The value of advisors: it’s about asking the right questions

If costs triple again over the next fifteen years, they would rise to $78,000 annually. That would make access to quality healthcare difficult or impossible for most Americans.

After retirement

Rising health care costs will eat through retirement savings at a much faster rate. According to HealthView Services, a couple retiring in 10 years can expect to use 100 percent of Social Security to pay for healthcare costs. A couple retiring 20 years from now will require 127 percent.

Your first question after sharing this information with clients and prospects should be, “Where will you find income to pay for your other needs, like food, clothing and shelter?”

Remember, The Wall Street Journal has reported that Americans pay more in healthcare costs during the last three years of their lives than during all the rest of their lives combined.

Use this information to show all the grandmas and grandpas how and why they should leverage their money using life insurance. We must do this for our prospects and clients or most Americans will face bleak retirements.

You have the knowledge to really make a difference. 

 

Read also these columns by Van Mueller:

What women planning for retirement want: income guarantees

Doing right by clients in volatile markets: 3 examples

20 issues to inspire your prospects & clients to take action

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Tackling 2 top retirement issues: What clients need to know

Health premiums after Obamacare? They’re lower.

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When health insurers start to announce rate increases for the upcoming year, it almost always comes with a sense that the sky is falling. There’s been no shortage of doomsday reporting lately as companies submit rate increase requests for 2017 Obamacare insurance policies.

Across the board, things don’t look so bad: The Kaiser Family Foundation projects a rate increase for the second-lowest cost Silver plan in 14 markets of about 10 percent.

But changes in what insurers charge for coverage vary widely across states and among insurers, and in some cases, the jump in prices is concerning. Though insurer rates in Washington and Rhode Island are going down, health consulting firm, Avalere, found the lowest-cost Silver plans in Connecticut, DC, and Oregon will increase by more than 15 percent.

Those numbers are tame, however, when compared with the requested rate hikes submitted by Geisinger Health Plan in Pennsylvania, which filed for a 40 percent increase in 2017, and Blue Cross and Blue Shield of Texas which is looking for 60 percent jump.

It’s little surprise that when coupled with rising out-of-pocket costs, many American families say health care costs top their list of worries.

Surprisingly good news about premiums

Three years before the ACA took effect, health insurance premiums were increasing by 10 percent to 12 percent each year, and the rate of the uninsured was growing.

Today, even as news about big premium increases for 2017 raises concerns about the Affordable Care Act’s long-term health, an analysis released last week in the journal Health Affairs seeks to put things in perspective. The upshot: Things could be worse.

It turns out that the average premiums in the individual market actually dropped when the ACA was implemented.

“Average premiums for the second-lowest cost silver-level (SLS) marketplace plan in 2014, which serves as a benchmark for ACA subsidies, were between 10 and 21 percent lower than average individual market premiums in 2013, before the ACA…,” write researchers from the Brookings Institute.

And in 2016 – two years into the marketplaces’ operation – premiums are still lower than they were in the individual insurance market in 2013. They’re 20 percent below the Congressional Budget Office’s (CBO) original projections, write co-authors of the analysis, Paul Ginsburg and Loren Adler, write.

In addition to lower than expected premiums, ACA plans include a host of benefits many policies didn’t have before the law took effect. That, along with a guarantee of coverage for all who apply for health insurance and restrictions on medical underwriting should have caused a precipitous spike in the cost of health plans.

These results are not what many experts expected.

Researchers give credit for the downward pressure on prices to a host of factors: Competition created by an insurance market that expanded to include millions more customers, greater authority built into the law for lawmakers to review insurer’s premium rate increases, and a cap on the percentage of revenue insurers can use for overhead and administration.

More importantly, insurers were insulated from financial loss by the law’s risk corridor and reinsurance programs, the latter of which the Commonwealth Fund claims reduced premiums by as much as 14 percent over the three years it’s been in place (it expires after this year).

Yeah, but I still can’t afford coverage.

New benefits baked into ACA-compliant plans give consumers more for their money; Silver plans cover 17 percent more health expenses than the average plan prior to the ACA, according to the analysis.

Even with rates set to skyrocket in some markets for 2017, researchers estimate that things would be much worse without the ACA. In fact, rates would have to rise by “more than 44 percent in 2017 to approach where individual market premiums would have likely been in the absence of the ACA, even under conservative assumptions,” the researchers write.

And, they’re reasonably optimistic that future years will see a return to more modest increases.

Not everyone agrees.

Health care consultant, Robert Laszewski, who is no fan of the ACA, wrote about Covered California’s recent announcement that in contrast to a rate increase of just 4 percent last year, rates will rise on average by 13 percent next year.

He sees more upward pressure on prices going forward, not less, and points out that health insurance costs come in three forms: higher premiums, bigger deductibles and co-pays, and narrower networks.

Source: Kaiser Family Foundation analysis of Truven Health Analytics MarketScanCommercial Claims and Encounters Database, 2004-2014; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 2004-2014 (April to April).

“The cheapest cost plans are cheaper for a reason,” Laszewski writes.

Despite differing opinions among experts, there’s little debate that average Americans are, in many cases, struggling to keep up with rising health care costs. Our spending on deductibles and other out-of-pocket expenses is outpacing wages and these expenses are offsetting the savings gained in lowered or limited premiums growth.

Even President Obama openly acknowledged that despite inroads the Affordable Care Act has clearly made in improving access to health insurance and by extension, to care, for millions of people, rising health care costs remains a huge problem in this country.

He succinctly summed up the pain many people feel in a recent essay published in the Journal of the American Medical Association – the first time, by the way, a sitting president has done this:

“…Too many Americans still strain to pay for their physician visits and prescriptions, cover their deductibles, or pay their monthly insurance bills…”

If history is any prediction of the future, we’ll struggle next year as we do nearly every year, with the growing cost of medical care and health insurance. Will competition in the marketplaces, efforts at payment reform built into the ACA and plans to bolster the law in ways it currently falls short be enough to lower costs going forward? Only time will tell.

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Health premiums after Obamacare? They’re lower.

Building mindshare among millennials: 3 tools for success

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Providing information on the living benefits of life insurance can help spur sales of the products among young millennials (photo: iStock).

When it comes to life insurance, younger Americans are underinsured. Millennials represent the largest living generation, yet only 16 percent own individual life insurance, and about a third would be likely to purchase it in the next year.

While millennials believe they should be putting more money into products like life insurance, competing financial priorities such as buying a home, paying off student loans and other significant life events can present a substantial hurdle to their purchase of these products. In fact, one in two consumers say paying off short-term debt is more important than putting money into a policy.

Related: 17 ways to better market to millennials

Capturing this market opportunity presents a challenge for life insurance agents and agencies seeking to build mindshare among a generation that lives life to its fullest, a majority of whom would rather maintain their lifestyle today than prioritize something intangible like life insurance funding. Planning for the protection of assets and loved ones in the event of death can be a small afterthought for today’s young saver.

In a market traditionally defined by lengthy underwriting processes and paperwork among an older and wealthy client base, today’s life insurers are finding ways to adapt and evolve, reaching the young and underinsured in new ways through enhanced processes, products and innovations. Progressive agents are hanging up their sport coats, putting on blue jeans and pulling out smart phones to do business with a clientele that values speed, simplicity and value.

See also: Millenials are unprepared for retirement

Non-traditional clients in a traditional space 

Agents beware. Research shows 54 percent of today’s millennials liken dealing with financial intuitions to be as much fun as being stuck in a traffic jam. Breaking through to this audience can be an uphill battle, as expectations are high and the margin of products purchased can be quite low. millennials do business differently, and expect the companies they do business with to address their needs and on their terms.

Related: 5 ways to give millennials a cause (and a company) to believe in

Data shows that younger generations tend to rely on friends, coworkers, and family for information on retirement planning and insurance, while older generations rely more on their financial advisor. As with other experiences and products this generation latches onto, a positive experience can lead to referrals. A whopping 77 percent of millennials are likely to recommend owning life insurance to their sphere of influence, if their experience is favorable.

Consumers understand that life insurance delivers future benefits along with peace of mind, but it’s not always perceived favorably from a financial standpoint. Lincoln’s research shows 56 percent of millennials feel it is a necessity, and less than a half believe it is a good value and affordable. Striking the balance in this space is critical as millennials are willing to sacrifice price for an overall positive experience and something they feel is of value.

According to LIMRA’s 2015 Life Insurance Barometer, living expenses such as Internet, cable and cell phone bills ranked as a high financial priority and one of the reasons millennials have not purchased life insurance. The study shows 54 percent of millennials make these “screen” expenses a high priority. Yet compared to electronic expenses that can creep up into the hundreds each month, new offerings in the marketplace have made the cost of purchasing a life insurance policy less expensive.

See also: How millennials are redefining employee benefits

Innovations in underwriting 

Industry pacesetters are transforming the life insurance business, working to enhance the overall customer experience, and provide products and processes that meet the needs and expectations of clients of all ages and stages. Today’s life insurance policies are more streamlined, varied and flexible, offering choice to a generation that values technology, simplicity and speed. Innovations in automation, delivery, underwriting and technology are altering this space, helping younger applicants obtain a policy in a fraction of the time, and through an experience more consistent with their expectations. 

Related: 7 cities that wealthy millennials call home

The intersections between advances in medicine, technology and data have paved the way for new products and processes. Term offerings with lower face amounts are now providing younger applicants with an entry point to the space, and more attainable coverage at a time where their share of wallet is split between paying off student loans, buying a first car or home, and starting a family.

Insurers are embracing options that provide the ultimate client experience and help to make their business fully-electronic from end to end. New streamlined processes include tele-applications and lab-free underwriting opportunities to provide clients with a faster and less intrusive underwriting experience. E-delivery of policy materials are cutting down on time and paperwork, allowing clients to experience a faster policy delivery and eliminating the need for face to face meetings.

Related: 7 ways to create credibility and establish trust with prospects

Your toolbox for success: 3 tools 

(1) Embrace the new marketplace 

Based on Cerulli research, less than 10 percent of today’s advisor client base is age 40 and under. Yet this research tells us younger clients provide advisors with higher levels of growth over the long term. Today’s agents should not resist the current. Finding ways to work with this younger and growing subset of clients on their terms can lead to long-term success.

See also: Life insurers see enormous opportunity as millennials come of age

Progressives in the marketplace are building their business one smart phone at a time, using social media channels to provide education and to generate sales opportunities. Agencies are also segmenting their businesses to reach millennials and the mass market with new policies, investing in technology, infrastructure and resources to build their own proprietary platforms.

Life phase considerations are dominating conversations, and agents are networking with real estate firms, banks and other Millennial points of contact to reach younger applicants in a meaningful way, in their own environment, and on their own terms.

(2) Talk life, not death 

For younger clients, death is a far-off concern. The industry is move away from “death” terminology when talking about life insurance, replacing this conversation with talk about life, value and living benefits. Providing millennials with information on the living benefits of life insurance products can help potential policy owners understand why buying a policy now is a good idea.

Cash value life insurance can provide tax advantages and income flexibility for policy owners while they’re alive. And life insurance policies generally allow savings to be distributed income-tax free through policy loans and withdrawals.

Since many of today’s Americans hope to retire before the age of 65, providing education on how life insurance can offer an interim cash stream until other benefits may be accessed is important and a key point to convey. Some products also hedge against longevity, allowing policy holders to transfer their income tax free to their heirs in the event the income is not needed.

(3) Paint the big picture 

A life insurance policy is just one product in a saver’s well-rounded retirement portfolio. Helping policy holders understand how life insurance can fit into a holistic financial picture is important and can help savers identify the type of coverage that may be needed based on life stage and benefit preferences.

Discussions that move away from pure product education and towards how a life product meets an overall financial need will help today’s clients understand its value in protecting one’s assets over time.

Today’s financial and insurance professionals have a tremendous opportunity to reach an underserved market with a product that can help protect them, their assets, and loved ones. As the marketplace shifts, advisors and agents stand to gain by building their business one client at a time, helping millennials and younger generations explore life insurance options that fit their unique needs and expectations.

See also: What millennials want from work and life

 

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Building mindshare among millennials: 3 tools for success

4 ways driverless cars will disrupt insurance

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4 ways driverless cars will disrupt insurance

Risks will shift, split and eventually drop

Staff on July 29, 2016

 Driverless cars will reshape the insurance industry in four significant ways, law firm Borden Ladner Gervais found in its report on autonomous vehicles.

The first step will be risk shifting, where liability will move from the driver to the manufacturer, which would then purchase policies.

Another possibility is risk slicing, where both driver and manufacturer need auto insurance, and pricing shifts depending on how many and how often autonomous features are used.

Read: Don’t over-regulate driverless cars, industry tells Ottawa

Risk slicing will also play a role when driverless cars are part of a car-sharing service, as drivers don’t rely on autonomous features for the same amount of time.

Finally, driverless cars will likely reduce risk to varying extends, which BLG said would “complicate underwriting.”

“It is possible that insurance policies will provide a base level of insurance, with a higher or lower premium charged on the basis of each trip or on the basis of the insured’s driving habits generally,” BLG wrote in the report. “In fact, policies where premiums adjust according to the operational habits of drivers, as determined and reported by in-vehicle sensors, already exist.”

Read: A driverless car Q&A

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4 ways driverless cars will disrupt insurance

Last month’s prairie storms caused $50M in insured damages

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Last month’s prairie storms caused $50M in insured damages

The warm, humid air mass caused a small tornado near Ponoka, Alta.

Staff on July 29, 2016

The thunderstorms that swept across the prairies between June 28 and 30 caused $50 million in insured damages, according to the IBC.

The storms were caused by a warm and humid air mass, that also triggered heavy rain and flooding, strong winds, hail in Ototoks, Alta. and a small tornado near Ponoka, Alta.

“Storms like this bring the message home that we are seeing more extreme weather events and resulting damage to property,” said Bill Adams, Vice-President, Western and Pacific, IBC.

 

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Last month’s prairie storms caused $50M in insured damages

Referral selling: What you might be missing

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Think you can just tell sales reps to go ask for referrals? If that’s all you do, answer this question: How’s that working for you? (Photo: iStock)

Referrals don’t just happen, at least not at scale. Yes, occasionally a well-served client will mention your company to another buyer, and your team will get a sale without any real effort. But how often does that happen? Unless your company has a systematic, disciplined program in place to ensure sales reps are asking for referrals from every client, your team is leaving money on the table.

Why do you need disciplined referral sales strategies? If phones were ringing off the hook and sales reps were inundated with emails and social media requests to do business, then maybe (just maybe) referrals wouldn’t be that important. I admit this scenario has been repeated in several booms over the last 20 years. But the inherent problem was that salespeople took orders from anyone and everyone. Then when the economy tanked, they were let go. They didn’t know how to sell. They just filled requests.

Outside of rare business booms, sales reps always encounter these top two challenges:

• Getting meetings with decision-makers at the level that counts



• Generating a consistent stream of qualified leads

And there are more …

• Radio silence from prospects who don’t return messages



• Balancing client work with prospecting



• Sales processes that get longer and longer with more buyers



• Intense competition



• Economic downturns



• The social media time suck

Referral sales strategies address these challenges and more.

The business case for a referral program

Salespeople and executive agree that when you become a referral-selling organization, sales reps:

• Get every meeting at the level that counts with one call.



• Are pre-sold: Prospects know who they are and want to talk to them. (How great is that?)



• Have credibility and the prospect’s trust, which can be really tough for a salesperson to earn.



• Shorten your sales process: Sales reps spend more time with customers and less time prospecting.



• Ace out the competition: Your team scores meetings while your competitors are still trying to identify the real decision-makers.



• Save money: There are no “hard” costs to referrals — just your team of referral sources out there selling for you.



• Convert sales prospects into clients more than 50 percent of the time (typically more than 70 percent).

Referral selling is the biggest competitive weapon of any sales organization. No other marketing or sales approach comes close to the results you get with referral sales strategies, because decision-makers will always take meetings that are suggested by sources they know and trust. Yet, 95 percent of companies haven’t implemented a systematic, disciplined referral program with metrics, skills and accountability for results.

The formula for sizzling referral sales strategies

Wouldn’t it be great if sales reps were asking for referrals every single day? The only way to make that happen is to put a disciplined referral program in place.

Referral selling is simple, but it’s not easy. It can’t be an afterthought. It must be a strategic initiative for your company — one that is driven by sales leadership and includes three essential components:

1. Referral strategy development

Referral selling becomes your No. 1 outbound prospecting strategy and integrates into your sales process. You commit to measuring both referral activities and results, and you hold sales reps accountable for both.

2. Skills building

Asking for referrals is a behavior change. Reps learn how to define the business reason for a referral and how to ask for referral introductions to their ideal clients.

3. Implementation

Salespeople forget 87 percent of what they learn during training if there’s no reinforcement after implementation, no assessment of skills learned and no measurement of success. Sales managers must coach and reinforce referral skills to ensure it becomes a habit.

Where to start?

Current clients are your best source of new business. They know first-hand the value of your products and services, and the expertise your sales reps can provide. Well-served clients will introduce your team to qualified prospects who agree to meetings with just one call. Those clients will sing your team’s praises and “sell” your company to exactly the type of prospects salespeople want to meet.

But most clients won’t think to do it unless they’re asked. And your team probably won’t do that unless it’s part of your sales process.

What are you waiting for?

Are you all in with referral selling, or just trying it on? Are you telling your team to ask for referrals? Or do you unequivocally believe you have a process in place to bring in a steady stream of referral leads that will drive revenue, save your job and position your company for sales success?

Referral selling is simple, but it’s not easy. However, when you implement a disciplined referral program, build referral skills, and establish referral metrics, accountability and rewards, you’ll secure immediate results. Your team will quickly get meetings with their prime prospects and boost their conversion rates to more than 50 percent! Then those new clients will refer them to other ideal clients, who accept their calls and call them back. That’s how referrals scale and open the door to sales success.

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Referral selling: What you might be missing

Look beyond designations to experienced mentors

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Meeting the Challenge

There are lots of designations out there that one could get. All of them I’m sure would be of some benefit like the CLU or ChFC.

The problem I find with them is that they are all book designations. What I mean is, sure it looks good on paper, but the difficult part is applying it to the real world. I’ve been doing this for 30 years and love life insurance and annuities as a tool to solve peoples’ problems. Remember they are just tools and what the focus should be is helping people.

With all that said my suggestion is read, read more and read some more. You should become an Ed Slott Master Elite Advisor. The depth of knowledge will be invaluable. Become a certified advisor of the Nelson Nash Institute (the true founder of the Be Your Own Banker concept). You’ll learn more about life insurance and it’s applications than you ever knew possible.

Follow guys like Van Mueller out of Milwaukee, Wisconsin, and Tom Hegna the author of numerous books on the use of annuities and life insurance. David Gaylor from Dayton, Ohio, has an incredible new book about Income Allocation, which is how to use FIA income riders to the fullest benefit for retirees. All these people have been not only mentors to me over the years but personal friends and people of the upmost character. I’d go to battle with any of them.

Designations are nice. They look cool on your business card, but these folks live and breathe life insurance and annuities. They are some of the smartest people with actual knee-to-knee experience. Between them I have no doubt billions of dollars of annuities and life insurance have been sold. These are the people you should be learning from, ask to be mentored by them, buy their books and DVDs and whatever else they sell. This is what will advance your career dramatically and it will set you apart from all the other “salespeople” out there.

Do you have a question you’d like to ask our advisory board? Click here to submit a challenge.

Thomas J. O’Connell is the president of International Financial Advisory Group Inc., which offers a variety of retirement planning, wealth management and insurance services. Based in Parsippany, N.J., O’Connell has been a part of the financial services industry for more than 30 years, and is active in speaking and training in life insurance nationwide.

 

He is part of Ed Slott’s Master IRA Advisory Group, the Infinite Banking Institute and the Wealth and Wisdom Institute, and is also a member of the board of directors and second chairman-elect for the New Jersey Better Business Bureau. He also holds Series 6, 7, 63, 65, and 24 securities licenses, along with a life and health license in 12 states, including New Jersey, New York and Pennsylvania. For more information about Thomas J. O’Connell and International Financial Advisory Group, please visit www.internationalfinancial.com.

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Look beyond designations to experienced mentors

29-year-old man in wheelchair struck, killed by CN train in Moncton

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29-year-old man in wheelchair struck, killed by CN train in Moncton

Foul play is not suspected

The Canadian Press on July 27, 2016

A 29-year-old New Brunswick man in a wheelchair was killed when he was struck by a CN train at a crossing in Moncton, police said Wednesday.

RCMP Const. Derek Black said the man from Moncton was on the tracks at a crossing near Robinson and Victoria streets when he was hit by the train at 1:45 a.m.

“Police are trying to determine why he was on the tracks and what exactly happened,” he said. “There’s no indication anyone else was involved at this point.”

Cpl. Jacques Cloutier added that foul play is not suspected, but it remains unclear why the man was in the area.

“We may never (uncover what happened). We don’t know. That’s something for whether the investigation will reveal any further information or not.”

In a statement, CN confirmed the incident involved one of its trains, but declined to be interviewed.

Spokesman Pierre-Yves Boivin said the crossing’s gates were functioning properly, meaning the flashing lights activated and the gates came down. The area is largely residential.

Black said they would not release the man’s name.

The incident remains under investigation.

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29-year-old man in wheelchair struck, killed by CN train in Moncton

Insurer ordered to pay $10M policy in lawyer's sudden brain cancer death

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Principal unsuccessfully argued in court that had the company known about this policyholder’s recent visit to an ear, nose and throat specialist, the insurer would not have issued him a life insurance policy. (Photo: iStock)

A Connecticut federal judge has ruled that it was wrong for an insurer to refuse to pay out a $10 million life insurance policy on a Hartford lawyer who died of brain cancer.

Principal National Life Insurance Co. issued a $10 million term life insurance policy to Larry Coassin on April 26, 2012. The policy was formally issued to the Lawrence P. Coassin Irrevocable Trust.

At the time, Coassin was a partner in the Hartford law firm of Robinson & Cole, where he had a successful corporate and transactional law practice. Coassin died only 15 months after the policy was issued from a rare, very aggressive form of brain cancer. He died within seven months of his diagnosis. He was survived by his wife, Emily, and their two children.

According to court documents, Principal conducted a “contestability review” of the life insurance policy issued to Coassin. This was Principal’s common practice whenever a policyholder died within two years of issuance of a policy.

As part of that review, Principal learned that Coassin had seen an ear, nose and throat specialist who treated his dizziness symptoms at a visit only nine days before they issued Coassin the life insurance policy. Principal did not know about this visit when they issued the policy.

Nathan Berns, a senior underwriter with Principal, determined in October 2013 that the insurer would not have issued the life insurance policy to Coassin, if Principal had known about his visit with the ear, nose and throat specialist. Berns consulted with lawyers before making the determination, according to court documents.

See also: Here are 9 ways to preempt a will contest

U.S. District Court Judge Janet Bond Arterton, seen here, agreed with the plaintiff. (Photo: law.com)

The next day, Principal filed a lawsuit in U.S. District Court in Connecticut, seeking to rescind the policy.

“As a result of Coassin’s knowing and material misrepresentations and/or omissions as to his medical history on the application, the policy is void ab initio and of no force or effect since its inception, and Principal Life never has nor ever could become liable for the death benefit under the policy,” wrote Principal’s lawyers in the complaint.

Coassin’s family learned of Principal’s decision and lawsuit and filed a counterclaim of their own, seeking to enforce the policy and force Principal, as provided in the policy, to make the $10 million payment to the trust.

Coassin had recurring bouts of vertigo, for which he sought treatment. The trustees argued that, had Principal known about the doctor’s visit in question, they would have inquired further about the condition but ultimately would have issued the policy.

“If Principal knew that Larry Coassin was going to die of a rare, aggressive brain cancer, of course it would not have issued the policy to Larry Coassin,” wrote the trustees’ lawyers in their counterclaim. “… It is important that not only did an ENT specialist, a neurologist and a radiologist conclude that Larry Coassin had no medical condition that required further investigation … but also neither Larry Coassin nor anyone around him had information to the contrary. Larry Coassin was an incredibly energetic, busy, physically active and intellectually active person.”

U.S. District Court Judge Janet Bond Arterton agreed with Coassin’s family.

“The Court concludes that Mr. Coassin’s knowing misrepresentations on his life insurance application were not material, and as such, the policy was not void ab initio and Principal did not have a right to rescind it,” Arterton concluded.

Arterton then ordered Principal to pay the trustees of Coassin’s policy the $10 million.

Lead attorney for Principal is South Florida-based lawyer Julie Cloney, who could not be reached for comment by press time. Coassin’s trustees were represented by David Schaefer, of Brenner, Saltzman & Wallman in New Haven. Schaefer did not respond to an interview request Wednesday.

See also: 5 ways to improve your client’s life insurance situation

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Insurer ordered to pay $10M policy in lawyer's sudden brain cancer death

RISK: Piracy risk drops in Southeast Asia, spikes in the Gulf of Guinea

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RISK: Piracy risk drops in Southeast Asia, spikes in the Gulf of Guinea

In April 2016, there were 14 attacks off the Niger Delta

Staff on July 28, 2016

Maritime crime and piracy in Southeast Asia and the Indian Ocean has dropped significantly in 2016, statistics from Dryad Maritime show. In the first half of the year, the regions saw 49 incidents of piracy, down 66 per cent from 2015.

Read: Piracy is a bigger problem for Canadian ships than you might think

“In the Indian Ocean, we are witnessing a period of de-escalation as ship owners are placing less reliance on armed security in favour of information-based risk mitigation,” Ian Millen, COO of Dryad Maritime, said in a release. “Whilst the welcome containment of Somali piracy has come about as a result of a comprehensive, joined-up approach, including naval forces and embarked armed guards, we are very mindful of the fact that the situation at sea can change rapidly. In short, avoiding complacency and remaining vigilant is as important today as it was in years gone by, as any material change in the risk/reward ratio for Somali pirates could result in further hijacks of those that fail to prepare well or are reckless in straying too close to Somali shores.”

The most dangerous region for seafarers, on the other hand, is the Gulf of Guinea, where kidnap and ransom risk is great. In April 2016, there were 14 attacks off the Niger Delta, resulting in 10 crew members being kidnapped from three vessels. Some were as far as 110 nautical miles from shore.

Read: Pirate hackers lead to high shipping losses around South China Sea: AGCS

Other dangerous regions for mariners include the Mediterranean because of its migrant crisis and the waters around Libya, Syria and Yemen because of the conflicts there, Millen said.

“Our advice is to encourage all to build the best possible awareness, thereby reducing uncertainty and enhancing preparation.”

 

 

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RISK: Piracy risk drops in Southeast Asia, spikes in the Gulf of Guinea