Archive for April 18th, 2009
There are several options available for paying your life insurance premium. To see it advertised you would think that the only options are monthly.
Of course the reason for advertising monthly rates is well known. Giving a potential customer sticker shock by making them think they might have to pay $240 for term insurance all in one whack is a no brainer when you can keep them focused by saying $20 a month, or even the famous pennies a day approach.
But let’s talk options because they are in fact very important. Being a graduate of the Dave Ramsey Financial Peace University (remember Dave’s Town Hall next week), I can tell you that budget is everything in your financial life. If it’s not budgeted and comfortably so, there is a point when something else will get in the way and you won’t pay that life insurance bill. Lapsed life insurance isn’t going to help your family if something happens.
Even though annually, once a year, is the least expensive way to pay for your life insurance, getting a large bill once a year at least in my world throws everything off. The other options are semi annually, quarterly and monthly. Generally the only way you can pay monthly is by automatic bank draft. All of the options other than annually incur something of a surcharge or, as the companies like to put it, the annual premium is actually a reduced option.
To put this in perspective let’s assume your life insurance annual premium with Prudential is $1000. Each company has a factor for determining the different payment modes. With Prudential if you want to pay semi annually that factor is .52, or $520 every six months, $1040 a year. If you want to pay quarterly their factor is .265, or $265 every three months, $1060 a year. If you want to pay monthly their factor is .09, or $90 per month, $1080 per year.
For those who are more concerned with interest lost versus ease of budgeting they often pick annually. As for me, the ease of the monthly bank draft and the peace of mind of knowing that I’m not going to accidentally lapse something, is worth the additional charge.
Bottom line. Make sure the total cost of your life insurance is affordable and make sure you budget your payments so that you can maintain the valuable coverage.
April 18th, 2009
I know Selectquote blows a cork every time I say something about them, but I have contended in the past that their after the sale customer service is non existent and I would just like to reiterate that point.
As discussed in a recent post, there is actually great value to having your life insurance reviewed annually. It only takes a few minutes and can help ensure that your policy is still set up to meet your needs and wishes, and can also potentially save you money if a better rate has come available.
I am working with a client that got their last term insurance policy through Selectquote 10 years ago. He had actually contacted me because he had read about customer service in a blog post and on our website. When I asked him about his customer service experience with Selectquote he shared that since he bought the policy 10 years ago they hadn’t called, written or emailed.
Bottom line. This customer needs to have his life insurance for a longer period than he originally purchased and had his policy been reviewed annually, this would have come to light sooner saving him money.
I understand that Selectquote can’t possibly do annual reviews when they sell 100,000 or so policies a year, so if customer service is an important value added to your life insurance policy, you might seek out an agency that still believes that service doesn’t end with the sale.
April 18th, 2009
Some years ago Reliastar, a perennial powerhouse in the term insurance business, seemed to fall to pieces. They quit communicating with agents and their underwriting started to take so long that agents that cared actually started to be concerned about the length of their underwriting process in respect to the fact that people do occasionally die unexpectedly.
At that point we made the choice to quit recommending them to customers. It simply seemed prudent to take customers to companies with comparable rates that we could count on to do an expedient job of underwriting and issuing policies.
Then we got calls from them saying they had addressed the issues and they were back and ready to compete. At first I used them very cautiously, but when it seemed they had indeed changed, we added them back into the portfolio and started recommending them more freely. For about a year and a half that worked very well. Because of some of their unique underwriting on family history and private pilots, it was good to have them available.
But they seem to have fallen off the precipice again. Underwriting has slowed to a snail’s pace and they have all but cut off communications between underwriting and agents. It’s gone on long enough that it doesn’t appear to be an anomaly and is suspiciously in the same time frame as their lay off of 1000 or so employees. They are officially suspended from our use again unless their is just an overwhelming reason to use them.
Bottom line. Other companies have gone through these phases as well, but I can’t remember any that have been as challenged in the service area as much as ING over the past 5-6 years.
April 18th, 2009
