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Update News for June 2010
Here is a quick run-down on what you will find in this bulletin:
These topics will be dealt with in more detail throughout this bulletin.
The following is a typical question we are getting fairly routinely:
No, you cannot dump a lump sum into our software, but there is a way to approximate the benefit of a lump sum placed into a no lapse UL contract.
EXAMPLE: Let's assume we have a 60 year old client who has a 15 year old whole life policy with a face amount of $500,000, a cash value of $70,000, and a premium of $6,000 per year. He is a non-smoker, in preferred plus health.
QUESTION: How much no lapse UL can he buy if he transfers the cash value and keeps paying the same premium?
To solve the problem, and make it easy for the client to understand what is going on, you break it into two steps.
First, the cash value, all by itself, can purchase a single premium no lapse UL policy. To get an idea of the relevant cost, we enter the client information into Compulife and use a face amount of $100,000 (if the cash value was $700,000 you would use a face of $1,000,000).
We run a comparison to discover that the lowest cost company has a single premium of about $22,000. We now take the cash value of $70,000, divide it by $22,000, to get a factor of 3.18. This means our cash value can buy about $318,000 of single pay, no lapse UL. Let's call it $300,000 even. We run a comparison for $300,000 of face amount and there are lots of companies with single premiums under $70,000.
Second, we run a comparison of no lapse UL with premiums to 121, using the same $300,000. We discover that the annual premium is $4,218 per year. The client was paying $6,000 per year, so we divide $6,000 by $4,218 to get a factor of 1.42. Multiple 1.42 time $300,000 to get a new face of $426,000 - call it $425,000. We change the face amount in Compulife to $425,000 to find lot of companies with premiums around $6,000.
Therefore, the coverage which the old cash value and premium can provide in a no lapse UL is $300,000 plus $425,000, which is a total of $725,000.
Alternately, if the client wanted to keep the same coverage, he can do so and have it fully paid up in 10 years. Instead of buying $425,000 of pay to age 121, he could buy about $200,000 of 10 pay which has about the same premium (run the comparisons). That would give him $300,000 of single pay, plus $200,000 of 10 pay, for a total of $500,000 - all guaranteed paid up in 10 years.
IMPORTANT: It is of significant benefit to the client to combine the single pay with the annual payment coverage, in ONE policy with ONE company. We are advised that many single pay policies will end up being considered modified endowment contracts by the IRS. The tax implications are less favorable than if the policy was NOT a modified endowment contract. However, when you transfer cash into the product, and continue to add premiums, making the face amount larger than what would have been provided by the single payment, the policy avoids becoming a modified endowment. You will need to consult the company's UL quoting software to determine whether the policy will be a modified endowment or not.
Once you have done some quick guess-timating using Compulife, and have come up with some two step comparisons for your client, and having explained how this works in principal, you will need to run an illustration from a company's software in order to get precise information.
While breaking this into two steps will be more work for you, it will create quotations that will help the consumer understand what is going on with the 1035 transfer. Their old cash surrender value provides for a certain amount of insurance, as does the premium they are paying. Combining it together without the two step explanation, is likely to leave a consumer in the dark as to how it works. The comparisons underline for your client that you have taken great care to locate a highly competitive policy.
So while we are on the subject of single premium, no lapse UL, let's remember that a single premium policy is really just an alternative way of funding a contract.
Let's look at an example using full guaranteed no lapse UL.
Let's assume we have a 60 year old who wants to provide his estate with $500,000, WHEN he dies. He is in preferred plus health.
A no lapse UL policy, with premiums and coverage guaranteed to age 121, is $6,960 per year from Banner Life.
Alternately, if your client has investment capital which can be placed on deposit with the life insurance company, he can take $136,000 to Aviva Life who will give him a policy of $636,000. If he dies, the company will pay his estate the $500,000, and return the $136,000.
So which is better, paying $6,960 per year, or simply putting the $136,000 on deposit?
If the client takes the $136,000 to the bank, what interest rate would he have to earn to get $6,960 per year to pay the insurance premium.
Now the first thing you must remember is that interest is paid at the end of the year, whereas premiums must be paid in advance.
So, we take $6,960 from $136,000 to pay the first premium which leaves us with a balance of $129,040 to invest. In order for the $129,040 to generate $6,960 in interest, the investment will have to earn a 5.39% rate of return.
While 5.39% is a pretty high interest rate in today's market, your client would actually have to earn much more than that because they will have to pay the premiums with "after tax" dollars. What tax rate is your client in? If they are in a 40% tax rate, their 5.39% would actually have to be 8.99% because 3.6% of that will be needed to pay off Uncle Sam.
So in effect, placing the $136,000 on deposit with the life company, is equivalent to getting an 8.99% rate of return on their money, fully guaranteed, for life.
How does that look versus the current bond market?
NOTE: Here is an Interest Adjusted Cost Analysis which makes it easier to see how the calculation works year by year:
Yes, you too can do these with the Interest Adjusted Cost Analysis in Compulife.
IMPORTANT: Compulife can now quote modal premiums for many of the no lapse UL products for which we have previously been unable to quote. The key word is "CAN". In order for us to be able to do so, we need the modal rate tables from the life companies in question. To date only 3 companies have provided those tables to us.
If there is a no lapse product in Compulife, for one of your favorite companies, and we aren't quoting the premium modes that you like to sell, then you need to put a fire under the company to get us their modal rate tables.
Keep in mind that this is no different than limited pay versions of no lapse UL. Now that we can handle all these new options, some companies will have to do some work to get us the numbers that we need. Typically the people in the life companies who can do that only respond to demand and the best demand is from you the agent who actually sells the products.
We apologize for the delays in releasing the new Internet engine, but two major changes have occurred and we wanted to package those up and release them at the same time.
First, the new system quotes the modal premiums for no lapse UL products, where the modal premiums are calculated from separate modal rate files.
Those of you who have your online web site quotes done by Compulife ($99 per year) are already looked after on this first item. Only those who maintain the internet quote engine on their own servers will need an update to the internet engine in order to take advantage of the new web quoting functions.
Second, the new system has enhancements to the health analyzer, including what we call a "mini-health" option for asking health questions on the client entry screen. This change has been made to facilitate those who prefer their web site to be asking health questions up front, as opposed to asking those questions after a quote has been displayed (the method that we use at www.term4sale.com and which we will still do there).
The changes have also been made in order for us to be able to offer the health analyzer as an option to our $99 per year web quoting systems. Those that want to add a health analysis function to their web site will be able to do so for an add-on cost of $80 pear year. We should have an announcement about the availability of that next month.
Once the engine is updated and ready for shipping, we will send emails to those who we show have purchased the engine. If you are developing and trying the engine, but have not gone live or been invoiced for it yet, you will need to contact us for the update.
Those who use the engine on their own servers (see above) will also need to add some new data files in their updates to the \COMPLIFE folder on their servers.
For any given category or type of insurance, Compulife has had two files:
Where the question mark is a numeric or alpha value. For example:
Those are the two files that the system uses to quote 10 year term policies.
With the introduction of modal premiums, there are now 8 of these files, not two. The 8 files are:
Where "M" is for monthly, "H" is for semi-annual, and "Q" is for quarterly. All of these files will now need to be placed onto your internet server or your system will not quote the modal premiums for those products properly. This is in addition to updating the new internet engine in May.
To date we have used the new system to add the modal premiums for UL products for:
Once again, if you have a company that has a no lapse UL product in Compulife, and the monthly premiums are not quoting, you need to contact your company and let them know that Compulife can now use and quote monthly premiums from monthly premium rate tables and we will add those values to our system just as soon as the companies get us those values.
Once we have updated the internet engine users, we will turn our attention to updating our Palm and Windows PDA software.
Having noted that, increasing numbers of agents are switching over to on-line phone/pda systems. All the above changes have already been updated for those devices on our web site at:
NOTE: That site will eventually be replaced by personalized versions. Go to the section of this bulletin called "On-Line PDA Software" for more information.
While we are discussing PDA's, you need to be aware that Palm is no longer using it's old operating system (the one we use) in any of the new smart phone devices that Palm is now manufacturing. That means, for all intents and purposes the, the old Palm operating system is dying. The question is, how much longer can/will Compulife support the old Palm system?
We expect to support the old Palm devices for another year to two years. As we have been discussing at the bottom of each bulletin for some time, we are making plans for a significant overhaul of our system, including the data structure we are using for our software. As in the previous example, there are now 8 separate data files required for us to quote 10 year term products. In the new generation software we are planning to develop, those 8 files will be combined into a single file. And the new data structure will make it much easier to add the kind of changes that we have just spent a month working on, to deal with no lapse modal premiums.
Our transition will be such that we will be running the old system and the new system concurrently for a period of months (and that's at least a year away assuming no more significant delays). If, when we switch over to the new system, we run into any problems, we will have a copy of the old system in your \COMPLIFE folder so you can fall back and use the previous system. We did the same think when we transitioned from DOS to Windows.
We also did that in April when we gave you a backup of our previous Windows program. It was installed on your computer with the April monthly update and it is called "OLDGOWIN.EXE". Some of you found the need to use that last month because we had a bug with the way the new web updating software was downloading subscription renewals. That same "fall back" strategy will be implemented when we convert to the new file system.
So in the future, when we introduce the new software, and for a period of a few months following that, you will have old and new programs and data in your system. As long as the old data is current and maintained, your Palm program will work. But we will not be converting the Palm software over to the new data format, which means when we have finally completed our transition to the new programs and data, you will lose the ability to use your old Palm device with the Compulife. Again, we think that is probably 1 1/2 to 2 years from now.
In its place Compulife will continue to support Windows Mobile devices, providing Microsoft does not make a significant change where there new Windows mobile devices won't run old Windows Mobile software (which is what Palm has done).
Further, and as we have been trying to get to, our next major job is allowing you to have a web version of Compulife for phone/PDA devices that are connected to the web, such as the Apple Iphone. More and more agents are buying and using those devices.
If you are a current subscriber to Compulife, and have never before had our web quotes on your web site, you can have the option for 4 months for FREE - with no obligation to purchase the service at the end of 4 months. This is a standing offer.
To date over 300 Compulife subscribers have acted on this offer and have added our quote system to their web sites.
To obtain your 4 months of free quotes for your web site, complete the application here:
But what do you do if you don't have a web site?
We are routinely getting calls from subscribers who ask for our advice about setting up a web site. That is no surprise really, given that we can now add life insurance quotes to a web site for only $99 per year and that's a hot ticket for a life insurance web site.
The conversation usually begins, "I've been thinking about getting a web site but I don't know where to begin." So here is the advice that we have been giving:
First, godaddy.com is just to good not to use. These folks can help you get your domain name and set up a site, and the first year cost (for their economy package which is way more than you need to start), is $50.
While godaddy is not the only provider out there, we use them as one of our providers (we have several) and I have to say with some satisfaction, that they have done as good a job as any of the other providers that we use.
So here is the first thing that you do. You go to www.godaddy.com and start searching for an available domain name. It's the box at the top of their home page called: "Start You Domain Search Here..."
Obviously, if your company is called "Compulife", then you will want compulife.com. Sorry, that's taken, we have that.
If you call yourself "Barney Insurance Agency", then the first thing to check would be "barneyinsurance.com". Ooops, that one is already taken. So the next you would try is "barneyagency.com". Hooray, that one is available. Register it immediately before someone else gets it. I wish I knew all this 10 years ago.
Now normally if all you are doing is registering the domain name, godaddy is going to charge you $10.69 per year. But if you do it and order a hosting package from godaddy at the same time, they will cut the price to $1.99 per year. I recommend the 1 year hosting plan, which will cost you $3.99 per month - which is $47.88 per year. Add $1.99 and your web site with domain name is $50 for the year.
OK, so buy that and you don't need to buy any of the vast sea of options that godaddy will try to sell you as you move through the purchase process.
So now, in real estate terms, you have just purchased a vacant lot which has a street address. Now the question is, what kind of building(s) will you put on your piece of internet land?
Here's something you can do right away - and I'll take care of it for you. If you send me the FTP information for your new site, I will put up one of these for you, for free for 4 months:
No cost, no obligation. There, you now have a site and you now have a quote system on your site.
Do you want more on your site? Sure you do. You will want pages that tell people who you are, what you do and sell, and how to contact you. The best way to get pages created for your site is to go to your local college/university and ask for a 2nd or 3rd year student who knows how to construct web pages, and hire them for dirt cheap. I know students (graduates) who worked for free just to have something for their resume.
Keep it simple to start. Your web site is an expanded business card. It tells people about you. Instead of packing all that on your card, you put on your card:
NOTE: That is actually a web site offering "FREE" web sites. I would recommend against doing that because nobody does anything for nothing. The godaddy package is CHEAP and there are no strings attached.
Email addresses @hotmail.com and @gmail.com strike me as "kinda unprofessional". It sends the message to you colleagues and clients, "Yep, I am a computer newbee and do not have a web site."
Once again, after you order your site, you can email me your FTP information and Jeremiah or I will put a quote system on your site FREE for 4 months. To FTP to you site we need the following:
Once again, here is a sample of the free quote system we will put on your new site for 4 months:
Email us your FTP information at email@example.com
We will then email you a link to the control panel for your quoting site. The control panel will allow you to choose which companies to quote, and to enter which email address requests for applications go to (they won't be going to us - they go to you).
Some people may be concerned with sharing their FTP information with us for their website. It's tantamount to you giving us your email address and password and so you shouldn't give the information to just anyone. But we promise to ONLY use it to load your quoting web page to your web site. But if you are concerned, here are some instructions on how you can do it yourself, FREE - NO CHARGE!
When you set up a website with a company like godaddy (IP - Internet Provider), what you are doing is buying space on one of their computers (called a server) that is connected to the web.
Usually you develop pages, which are really just text documents, on your computer (or your developer's computer). When the pages are ready to try out you transfer (copy) them to your server using a program called an FTP (file transfer program).
When you run the FTP, having entered in the address, userID and password to make the connection to the server (godaddy), your computer's folders and files will appear in the left window of your FTP, and the internet computer (server) will appear in the right window. You then just copy from the left window to the right window, and the files go to your server. It's no different than copying files from one folder of your computer to another drive or folder on your computer.
Here's a good video with more information on that:
The next logical question is, how to I design a web page?
Once again, web pages are just text documents with instructions built into them that tell the browser (Internet Explorer, Firefox, whatever) what to display and how to display it. Pages can be simple or they can be very complicated. Guess what, we like simple.
Now if you were going to design a magazine ad, would you do it yourself or would you hire someone who knows how to do it? Likely the latter. That's why, I strongly recommend going to your local college or university and hiring a 2nd or 3rd year student to do the work for you. They are enthusiastic, need the money, and typically are very creative. But if you are one of those people that love to change their own brakes, here is a basic introductory to web page design:
Good luck with that.
Assuming that you have someone else design your web pages it is still a VERY GOOD IDEA to learn how to use the FTP. Why? Because you will want to back up the pages from your web site (the files on the server) to your own computer. You do that by copying the files from your server, to your computer, using the FTP. Let your developer develop, but make sure you back up what you pay him to do, from the server to your computer.
Here's another tip. Make sure EVERYTHING your developer is using for your website, is on your website, and not somewhere else. If your developer has something on their server, and you and the developer part company, then what you used on their server will be gone, which is going to really tick you off if you thought you had bought and paid for it.
Which brings up one last thing when retaining someone to design your website. You want to make absolutely certain that it is your mutual understanding that if you pay someone to design a web page for you, that it is YOUR webpage and not their webpage.
Think wedding photography.
Have you noticed a lot of people pay wedding photographers to photograph weddings, and then discover the photographer OWNS the negatives, meaning that if you want more copies of pictures, you have to pay the photographer an arm and a leg to get them. And you find out you are breaking copyright laws if you copy the pictures you already bought.
Believe it or not, when you hire a college student to do your web site pages, you will have no trouble reaching an agreement that the pages are YOUR pages. But if you pay some outfit hundreds or thousands of dollars to do your site, they will often argue that the pages belong to them. If you leave the relationship, you will have to start from scratch.
Don't have a domain name yet? We have a great list of available domain names that are pre-registered and ready to go. Read on!
Three months ago we told you about the slate of domain names that we pre-registered, and that we are offering for sale to our subscribers. A number of the best one's have been picked through and purchased.
The new price is
$99 $79 $69 - down $10 from last month. Will we drop the price again? Yes, we suspect that by the beginning of June the price for the remaining domain names will drop again. We will probably cut the price dramatically by the summer and by Christmas will be practically giving them away. The point is that we will keep dropping prices until our current inventory is sold out.
The problem is that if you wait you may lose a great domain name to someone else. More than one of the sold domain names were requested by another subscriber after they had just been sold to another subscriber who beat the second person to the punch. You snooze, you lose.
And if the latest price cut doesn't suit you, and instead of waiting around for another domain name price drop, feel free to MAKE US AN OFFER on any remaining domain name(s) that you want. If it is a reasonable offer we are likely to take it.
For more information about the domain names that we have for sale, and the web sites that are ready to go, click on:
We are yet AGAIN delayed on this project, do to the monthly premium change that we are making for no lapse UL products. Our apologies for this taking so long, and hope you understand we are trying to devote out attention to the issues most needed.
The system we are building to track PDA use of our new online PDA service is more involved and has taken longer than we originally anticipated. Such is life in the software business when you are breaking new ground.
For that reason we have taken a baby step forward and implemented the "look and feel" of the new service at:
Once the new online PDA service is available, where you will be able to select the companies you want to quote, an enrollment form will replace the quoting service at:
Once you completed the enrollment form, a personalized version will be created for you and you will have your own Administration Panel that lets you include only those companies that you want to quote. Those of you who are now trying Compulife's new web quotes for your web site will have already seen the new administration panel. The one for the PDA version of the software is exactly the same.
Unlike the new web quoting option that you can buy for $99 per year, the new PDA quoting service that we are rolling out will be FREE but it will be for your personal use only. Your web address, for your PDA online quote system, must be kept confidential and it must not be used by others or made available on your web site. That's why we are implementing features to track who is using your PDA quote system. Remember, this is the FREE version for YOUR PDA only. We will be able to monitor the specific PDA's visiting your PDA quote site, and if more than the allocated number are doing so, the software will notify Compulife and we will shut down your PDA quote site.
If you want a PDA quote site that others can use, we can set that up for you for only $99 per year and we can do that now. And keep reading, you can get the first 4 months of the public PDA version for FREE. Once a public site has been set up for you, you can give the address to anyone that you want.
Once our work on the web engines and PDA/Phone software is complete, we will be turning our attention to some important maintenance work that is needed to the data entry systems. Those programs have not been updated for quite some time, and some need to be converted to take advantage of the newer programming compilers that we have been using for the Windows software that we already distribute to you. Our goal is to make it easier to program future software, which will ensure that we can roll out changes and improvements more efficiently.
Further, having reviewed where we are heading over the next few years, and the changes that we would like to be able to make in the future, we have decided to stop and do a much more extensive overhaul than simply changing our data entry software. We have determine that we would also like to implement a better data storage structure that will make maintenance easier on both a data entry basis, as well as a programming basis.
To achieve our goals in this regard, we will be spending a fair bit of time reviewing our new data storage needs, and then building conversion software that will convert our existing data files into our new data file structure. Once we have done that, we will then introducing new comparison software that does exactly what it does now, but which derives its results from the new data structure. In other words, you will end up with a new program that does exactly what the old program did/does.
Once this first stage is completed, we will have both old program and old data, with new program and new data. Moving forward we will use the old data entry systems to maintain the old version, then converting old data to the new data forms for general distribution.
The next stage is to create the new data entry systems that talk to the new data format. Once we are satisfied that the new data entry system give us everything that we have now, we will then switch to the new data structure alone. We will only do this once we have thoroughly tested the new software to ensure it gives us no problems in maintaining the date. This may take several months. As far as the part you use, by the time we make that transition, you will have been using the new software for several months.
The point of sharing this with you is that the process will be quite lengthy and so from this spring throughout most of 2010, you will not be seeing many changes and improvements to the software that you use, even though the underlying foundation will be going through a massive change. Once the foundation has been reconstructed, and all the tools to work on the foundation have been built, the program will be in a position to make some substantial moves forward.
Think of it as transplant surgery, where you need to keep the patient alive and well, at the same time as you are swapping out the organs.