Tag: insurance

How to turn your life insurance policy into a cash machine

I don’t know how many of my readers this will apply to, but it’s too good not to share. I got an alarming notice from my insurance company the other day that the premiums are going to increase on my universal life policy and I should consider increasing the premium payments.

If you don’t have a universal life policy (or don’t even know what that is) stop reading here. If you do, take a look at the annual statement of value you receive. That’s what I did when I got this notice and I discovered my policy has a guaranteed interest rate on the cash value, which is what’s left over after the premium is deducted, of 5.5%.

There are not many things you can safely earn 5.5% on these days, so I asked the insurance rep if I increased my payments, not by the few dollars required to cover their premium increase, but by hundreds of dollars a year, would they still have to pay me 5.5% on that surplus? The answer is yes. So it in effect becomes a savings account that pays 5.5% compounded with each payment.

I’m not going to name the company (they are a former client, actually) and it doesn’t matter because your situation will be different. But if you have an old policy with a fixed low minimum interest rate that’s not so low any more, this is worth checking out.

P.S. This strategy only works if you plan on liquidating the policy for its cash value at some point before you die. If you die, your heirs will have the choice between the face value and accumulated cash value, which will probably be less.

Allstate creates Mayhem with negative ad campaign

Copywriters love to write negative ads… they’re so much more fun than bland positive messages. But early in our careers we have it drummed into us that negative doesn’t sell. The reason is that the ad itself has no credibility. Rather than absorb an unrequested negative message, the reader simply turns the page.

I had to prove this for myself with a negative direct mail package to test against my control for Long Term Life Insurance at Met Life. Your chances of needing long term care are hundreds of times greater than the possibility of a home fire. Yet everybody carries fire insurance. Similarly, you have maybe a 1 in 10 chance of getting in an auto accident but the odds of needing long term care are 1 in 2. Getting worried yet?

The package bombed. Nobody wanted to read it. And I have stayed on the sunny side ever since…. with the exception of a few forays for my financial services client.  But now comes the Mayhem campaign for Allstate… which seems to be working, based on the way the campaign has expanded and the fact they are now running a “clips” spot for the holidays.

Mayhem points out all the bad things that can happen when you don’t have insurance or enough insurance…. with humorous depictions by the entertaining actor (who plays one of the dead family members on Rescue Me) Paul Dean Winters. My favorite is “Large Expresso” in which the bigwig executive, upset about losing millions in the market, spills a large expresso on himself and slams on the brakes… causing you to run into him from behind, your fault.

So we have two shibboleths broken at once, negative advertising and humorous advertising. Thank you Allstate (and thank you agency Leo Burnett).

UPDATE: Allstate’s PR folks contacted me to correct the spelling of the star’s name and to point out that Mayhem now has his own Facebook page. You can find it lower right on this Allstate site.