Welcome to the Welcome to the Estate Planning CouncilEstate Planning Council

of Greater Miamiof Greater Miami

Due Diligence in Due Diligence in Recommending the Recommending the

Correct Life Insurance Correct Life Insurance PolicyPolicy

Presented byPresented by

Michael W. Halloran, AEP, CLUMichael W. Halloran, AEP, CLU ® ®, ChFC, ChFC ® ®, , CFPCFP®®

November 11, 2009November 11, 2009

Establishing the Need for Establishing the Need for CoverageCoverage

NeedNeed

Temporary Temporary need – term need – term insuranceinsurance

Permanent – Permanent – Continuing needContinuing need

Term CoverageTerm Coverage

Annual RenewableAnnual Renewable 10-20-30-Year Level10-20-30-Year Level RenewableRenewable ConvertibleConvertible Waiver of PremiumWaiver of Premium

Permanent or Continuing Permanent or Continuing NeedNeed

Whole LifeWhole Life– ParticipatingParticipating

PortfolioPortfolio New MoneyNew Money

Variable LifeVariable Life– Mortality and Mortality and

Expense CostExpense Cost

Universal LifeUniversal Life– No guaranteesNo guarantees– Secondary guaranteesSecondary guarantees

Mortality TableMortality Table Company Financial Company Financial

RatingsRatings Guarantees and ProblemsGuarantees and Problems Purpose of CashPurpose of Cash

Variable Universal Variable Universal LifeLife– Investment RiskInvestment Risk

Amount of CoverageAmount of Coverage

EstateEstate

BusinessBusiness

CharitableCharitable

Understanding the Policy IllustrationUnderstanding 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

Professional Liability and Professional Liability and DisclosureDisclosure

Who are you liable to?Who are you liable to?– PolicyownerPolicyowner

– InsuredInsured

– BeneficiariesBeneficiaries

What happens if your What happens if your recommendations arerecommendations are wrong?wrong?

How can you limit your liability?How can you limit your liability?

Rating AgenciesRating Agencies

A. M. BestA. M. Best

FitchFitch

Standard & Poor’sStandard & Poor’s

Moody’sMoody’s

Standard & Standard & Poor’sPoor’s

www.www.

standardandpoors.costandardandpoors.comm

Moody’sMoody’s

www.moodys.comwww.moodys.com

FitchFitch

www.fitchratings.cowww.fitchratings.comm

A.M. BestA.M. Best

www.ambest.comwww.ambest.com

SuperiorSuperior

AAA 13AAA 13

AAApi 0AAApi 0

ExceptionalExceptional

Aaa 13Aaa 13HighestHighest

AAA 9AAA 9SuperiorSuperior

A++ 28A++ 28

A+ 82A+ 82

ExcellentExcellent

AA+ 11AA+ 11

AA 50AA 50

AApi 2AApi 2

AA- 32AA- 32

ExcellentExcellent

Aa1 13Aa1 13

Aa2 20Aa2 20

Aa3 37Aa3 37

Very HighVery High

AA+ 27AA+ 27

AA 40AA 40

AA- 19AA- 19

ExcellentExcellent

A 49A 49

A- 34 A- 34

GoodGood

A+ 8A+ 8

A 14A 14

Api 17Api 17

A- 10A- 10

GoodGood

A1 9A1 9

A2 8A2 8

A3 8A3 8

HighHigh

A+ 15A+ 15

A 9A 9

A- 4A- 4

Very GoodVery Good

B++ 4B++ 4

B+ 8B+ 8

AdequateAdequate

BBB+ 7BBB+ 7

BBB 0BBB 0

BBBpi 2BBBpi 2

BBB- 1BBB- 1

AdequateAdequate

Baa1 5Baa1 5

Baa2 0Baa2 0

Baa3 2Baa3 2

AdequateAdequate

BBB+ 1BBB+ 1

BBB 1BBB 1

BBB- 1BBB- 1

Vulnerable/FairVulnerable/Fair

B 0B 0

B- 0B- 0

VulnerableVulnerable

BB+ to R 5BB+ to R 5

Not Rated 56Not Rated 56

WeakWeak

Ba1 to C 1Ba1 to C 1

Not Rated 116Not Rated 116

Non-investment gradeNon-investment grade

BB+ to CCC- 0BB+ to CCC- 0

Not Rated 97Not Rated 97

VulnerableVulnerable

C++ to F 0C++ to F 0

Not Rated 18Not Rated 18

RatesRates

MortalityMortality

Expenses chargesExpenses charges

InterestInterest

– Investing longInvesting long

– Investing short Investing short

Thank You!Thank You!

Questions?Questions?