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MICHAEL P. HANLEY, INC.
California Insurance License #0688322
We have no affiliation with any life company, so there are no extra incentives or reciprocal agreements that require us to select one firm over another which should allow us to locate the products best matching your objectives and individual risk tolerance. Each company is reviewed for financial integrity and suitability before presenting to you.
"All companies price their products using four (4) basic factors: Mortality; Interest; Expenses and Persistency. The acronym is "MIX P". Mortality (risk rates) have been coming down over the last several years due to improved health and living longer, thus life insurance cost has become lower for the most part. Interest earned by the life insurance company on invested assets aids in pricing and is the only variable in the acronym. Expenses are a factor that have little variance as carriers are very efficient. Persistency of business staying on the books is a cost that all carriers have a good handle on as well.
Source: Walt Duemer, President
Exceptional Producers, Inc. (retired) and Chairman Emeritus, FFR Holding Company, Inc.
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These are the factors that make up the cost of all life insurance products. We are living longer thus mortality (risk) rates are dropping, this is a good thing. Interest is a variable but for companies to be competitive, they have to earn a reasonable return on assets and share a portion with the policyholder or they will not write new business.
Expenses are tightly controlled and well known; finally persistency of keeping business on the books for long periods of time is a function of competitive pricing and good underwriting with an attached cost. If any of these pricing elements are out of line, the life insurance company will not be competitive and thus not write any new business." |
"What is the best life insurance plan for you? Good question; the answer requires a careful analysis of MIX P. Every life insurance policy contains MIX P. The company actuaries use the following assumptions (MIX P) to build a life insurance policy:
Mortality: Although you might expect the rates at which insured's die to be the same throughout the insurance industry, there are marked differences in the data experienced by each company. Some will use liberal underwriting standards selling to almost anyone; others will insure only the healthiest, most qualify people at preferred or standard rates. So the specifics regarding the deaths in each block of insured's will differ. And since each company will use its own experience, the actuary's mortality assumptions will differ from company to company, affecting rates.
Interest: Insurance companies invest their reserves in a spectrum of assets yielding higher or lower interest than their competitors. There is a very wide range in returns on invested assets. The experienced actuary will price his policies using his own company's, rather than the industry's investment returns.
eXpenses: Some insurance companies are very expense conscious; others are not. And it's not just home office costs and computerization that affects rates. Distribution costs will vary widely depending on whether the company pays the cost for its own field offices or whether it uses independent agents who pay their own expenses. The size of the policies sold, as well as those in force, will also impact expenses. Smaller policies require a higher ratio of expenses, and, of course the converse is also true. The actuary must price accordingly.
Persistency: Perhaps the insurance industry's major concern is Acquisition Costs. It costs more to market, sell, underwrite and issue a life insurance policy than the company collects the first year. Those initial excess expenses must be amortized through the collection of the second and subsequent premiums. It its amortization costs are not covered, the company will go broke. On a level premium policy, the actuary will estimate how many (on average) premiums must be collected before the premium-payer drops the policy. A company with great persistency can price its policies lower than one whose lapse ration is high.
Our Responsibility to you: We are experienced at evaluating the assumptions utilized by companies who design and market life insurance policies. No one company has the best MIX P for everyone. Our job is to make certain that the policies we sell you are based on your specific circumstances."
To ask questions or review your current polices of over $250,000, please contact us at
925-944-0800 or click here to email.
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