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Update News for August 2008
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 terminology "mid-month update" seems to confuse some subscribers who think it means a single update in the middle of the month - NOT TRUE! The mid-month update is any update that we make between monthly updates.
The concept of monthly updates began 26 years ago when Compulife was distributed on floppy disks. The first reason that we elected to do it monthly, at the beginning of each new month, was that we wanted a routine time frame for doing updates so subscribers would know when to expect the software and to contact us if they didn't get it.
The second reason was to tie the service to a monthly billing process (in those days $79 per month). Of course prices have dropped substantially from that, and all billing is annual, but we still find the monthly time cycle a useful way to set subscription deadlines and anniversaries.
Having explained the background, the mid-month update is our way to get you the changes that we make to the system, as quickly as possible. While we can go as long as a week between mid-month changes, there are times when we are doing them daily. For that reason, and because most customers have high speed internet access, we think that subscribers should increase the frequency setting for obtaining mid-month updates.
The default mid-month frequency is currently set to 7 days. What this means is that 7 days after you last checked for a mid-month update, your system will check again. We recommend that you change the 7 to 1, which means that each day your system will check to see if there is a newer mid-month update. As we have already discussed, high speed internet connections make this check very quick, and because your computer is always on-line, you will hardly notice it happen. Those using dial-up may want to leave the check for 7 days, meaning that they do not have to log-on to the web each day they try to run Compulife.
Changing the frequency of mid-month update checks is done by clicking on "Options" at the top of the Compulife Red Master Menu. When you click on Options a drop-down list will appear, and one of the last choices on the list states: "Number of days between update checks (7)". The 7 in brackets would indicate your frequency is set to once every 7 days. When you click on this option a small window will display where you can increase or decrease the number.
IMPORTANT: We think you should change the number from 7 to 1. This means that once a day, whenever you first run the program, the system will check to see if there is a newer mid-month update.
If for some reason you feel the need to have it check even more frequently, you can set the value to zero which will cause the program to check for a midmonth update everytime that you run it.
Once again, providing that you are on a high speed internet connection, and providing that you have given Compulife access to the web (meaning you do not have a firewall blocking access), then you will find these checks are very, very fast. All Compulife does in order to perform the check is to download a 16 byte text file which indicates the date and time of the update on the web, and compares that to a copy of the last 16 byte file you downloaded and processed, to see if there is a newer version available. If it finds that there is a newer file, you are advised that there is a new mid-month update, and you simply say yes to obtain it.
The process is so fast because the 16 byte file takes virtually no time to download. The only reason to not check more frequently is if you have not got a fast internet access or Compulife does not have simple access to the web.
During August we made several changes to the Windows program and have been introducing them in the mid-month update to Canadian subscribers. As far as the new Critical Illness Comparison software goes, we have virtually completed the changes to the program, and are now actively adding more companies to the CI database. To date we now have the products and specimen policies for 7 life insurance companies.
The biggest challenge has been getting life companies to provide us with the specimen policies for each product entry, for each type of CI quote. To date ManuLife has been the most helpful, giving us a specific specimen policy for each variation on their products, basic CI, CI with ROP on death, CI with ROP and CI with ROP & ROP on death. This ensures your client sees the policy as it will be when delivered.
Other companies have given us the basic coverage pages, the bare minimum that we need, but those same pages are used in the more exotic ROP configurations. We would underline that it is to the benefit of the company to have the more exotic configurations set out in the sample policy document for that product configuration.
Table Ratings is an option in Compulife for single product displays. If you double left click on a product in the comparison results, a window with just that product will open up to the right of the comparison. If you then go to "Options" in that Display Single Product window, you will see Table Ratings on the list. This will allow you the ability to modify the quote to reflect a rating which a life company has advised that you may add to the product, to coincide with a sub-standard offer that the company has made to your client.
The first change to the Table Rating entry process is to temporarily disable the option which asks if you want the table rating applied to premium or the rate per thousand. Having had this choice in Compulife for some time, we cannot recall any situation where the table rating was applied to the rate per thousand. For that reason we are disabling (temporarily) the ability to select the rate per thousand - to see if anyone complains. If we get through the next couple of months without comment from subscribers, then we will permanently remove the option to select the rate per thousand rather than the premium.
The second change is like the first. We are unaware of any rounding scenario that is other than nearest and so we have temporarily disabled the rounding question from the options. If no one complains in the next couple of months, this will also be permanently removed.
The point of trying to remove options is to simplify the use of the software. The less you have to enter, or think about, the easier it is to use.
There are two added improvements.
First, you can now add a flat rating to a quote. If the company comes to you and says they need a flat $3 per thousand extra added to the product, for three years, and the face amount is $500,000, you can simply enter in a flat extra of $1,500 for 3 years. The system will now quote that rating properly and make a correct reference to it in the footnote of the printout. At this point we are unaware of combinations of table ratings and flat extras, but if we hear from subscribers that they have such situations, we may need to make a further change. As always, your comments are welcome and important.
Second, we have now made it possible for you to NOT apply a percentage rating to waivers. We have learned that some companies do not apply the table rating for the basic premium to the waiver premium rider. We find it strange that they don't but have been shown actual examples of where that is the case.
Here's is why we found the practice odd. Assume the premium for the basic plans is $1,000 per year, and the waiver is $100 per year. That means that if the insured is disabled for more than 6 months, the total premium of $1,100 is waived. Now assume that the company applies a 100% rating to the premium. The premium for the basic plan increases from $1,000 per year to $2,000 per year. It seems peculiar to not have a proportional increase in the waiver given that the total premium waived, in the event of disability, is now double what it would have been if there was no table rating. For example, if the case was not rated, and the client wanted twice as big a policy, with twice as big a premium, the waiver would also be twice as big. Having noted all this, we have now seen examples where company's do not apply the rating to the waiver and so you can now check the "applies to waiver" option to include the waiver in the rated calculation, or leave it unchecked to have the waiver remain "as is" with no table rating applied to it.
As always, the table ratings in Compulife are a manual entry system. Some would like a more automatic function but Compulife does not want subscribers using our software to guess or speculate about table ratings. The fact is that NO ONE can accurately predict what the exact table rating or offer from the company will be until the case has been submitted to the life company so that the company can underwrite the case and make an offer. Once you have received such an offer, you can use the option in Compulife to modify the quote, based upon the actual information provided to you from the company. It is important to confirm with the company, what the total premium will be and ensure that the modified quote in Compulife matches that premium.
If we were to include actual table rating percentages in our software we have no doubt that some agents would start winging quotes before the respective company(s) had a chance to review the case and make a decision. We want to avoid situations where we get caught up in complaints which may result.
You will notice improvements/changes to the Analysis programs in Compulife. We have modified the entry windows to use larger fonts which make the entry of data much easier for those who have trouble seeing fine print on their computer screen. For those of you who have desktop computers, it's time to treat yourself to a 20" LCD monitor (or larger). For those with laptops - this change is especially for you.
Another change that we have made is that the analysis screens now appear on top of the Red Menu, making it more obvious that you must close the Analysis window in order to get to the Red Menu.
The next change that will come out in August will be the elimination of the display year by year windows. We will standardize the Analysis program to work like the ROP Analysis which is in our U.S. software, where we go from the data entry window directly to the "Print Preview" window. The advantage of the Print Preview window is that the user determines how large the characters are on the display by zooming in or out on the page display. This should address past comments that we have had about the current year-by-year displays being difficult to see because of fonts that are too small.
While we are working on it Compulife will also be updating the Analysis printouts to use newer arial fonts rather than the old fixed pitch courier fonts. This will make our printouts more attractive and consistent with the rest of the comparison/quotation printouts that our system is able to generate.
For your consideration we are including a sample ROP Analysis printout for you to review. Click on this link and print it out:
IMPORTANT: Please keep in mind that the commentary on the pages is designed around Return of Premium options on U.S. term life insurance products - hence the reference to death benefits. Clearly those references would need to be changed to accommodate the CI products.
The key question is whether the actual numeric aspect of the analysis would be useful for our Canadian subscribers. In the example we have given, we manually entered the premium values for two level to 75 CI products, for $100,000 of coverage for a 40 year old male non-smoker. The more expensive premium was for a CI product with ROP, the less expensive product for a CI product without ROP.
The logic is quite simple. If you pay the extra, the ROP version gives you a chunk of money back at the end of the 35th year, assuming you still have the policy and that there has been no CI claim or death. The question is, what rate of return would you need, outside the CI ROP product, to duplicate the same payout at the end of 35 years, if you invested the difference in cost in an outside investment?
In the example we have given you, the computer has determined the outside investment would need to pay an annual rate of return of 6.15%. That is a particularly good rate of return if the money is all payable to the insured tax free. In the U.S., under current rules, that would be the case. But the rules might change - keep reading.
U.S. subscribers find this analysis very useful when comparing term products versus those offering ROP benefits at the end of the initial level term policy. It is particularly useful for more sophisticated clients, who understand tax deferral, and who are in significant tax brackets.
Agents dealing with less sophisticated clients will often not have this discussion, simply because the less sophisticated client is told (wrongly) that they are throwing their money away unless they have the ROP product. Further, they are told, that the ROP product will ensure that if they are still alive, and don't get an insurance benefit, will refund all their money. For many years this has proven to be a successful strategy for selling whole life to the ignorant who do not need it, and so the agent making that sale does not want to raise the subject of the opportunity cost of money or the fact that money should earn a rate of return when invested.
But back to our discussion of the more sophisticated sale and consumer.
The U.S. continues to enjoy tax rules that are comparable to the life insurance tax rules that existed prior to the early 1980's in Canada. Providing that you do not received more out of a policy than you paid in, the cash benefits of a policy are tax free in the U.S.. That is no longer the case for life insurance in Canada, where an additional calculation reduces the the adjusted cost basis of the policy (the tax free portion of a refund) by the relative annual cost of insurance.
However, it is being argued by some in Canada that the ROP benefits of CI products are taxed differently than life insurance products. Personally I would expect Canadian tax rules to change at some point, given the governments clear precedent on how they tax life insurance, but those who support the idea that the ROP benefits would be tax free, are correct to say that the Canadian government has not yet passed any laws to tax the ROP benefit payable from a CI policy. And then, if the discussion begins in earnest, there is the debate about how old products might be grandfathered. On that I am pessimistic given past grandfathering rules.
Apart from those considerations and others, which would need to be set out in the summary page of an ROP Analysis for CI products, the question is would Canadian subscribers want, need or use such an option if Compulife included it. In the U.S. the agent simply selects the product, indicates he wants the values filed to the ROP Analysis, and premiums are automatically transferred. The process is repeated for the opposite side product (CI with ROP versus CI without ROP) and then the ROP Analysis can be displayed and printed.
We would like to hear from you either way. Please email your comments to Bob Barney at:
To date Compulife has completed three tutorials.
For the U.S. and Canada there are two new tutorials. The first tutorial shows how to request and install a 30 day Free Trials. The second tutorial shows how to complete the "Dare to Compare Challenge" and, by doing so, how to get 4 free months of Compulife without any obligation to purchase.
A third tutorial is available to Canadian subscribers showing how to use Compulife new Critical Illness Comparison software.
One of the reasons that we are modifying our Analysis programs at this time is because we want to focus on having a video tutorial for each of these options. We suspect that most subscribers do not use these handy tools and we hope the tutorials will demonstrate why the options are in our software, and how/why they can be used to assist consumers.
Other tutorials that we are planning will be to discuss our Preferred Health Analyzer, the options available for comparisons and single product displays, etc. If you have an area where you would like to see us do a tutorial, drop Bob Barney a note at:
As we mentioned last month, with the completion of the changes needed to the Canadian software, we have turned our efforts to some 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 distribute to you.