For those that don’t smoke there is a virtual log jam of companies scrapping it out for those who qualify for the best rate classes. Not so if smoking is part of your portfolio.
For those who smoke it is imperative that you use an agent that has access to all of the companies that offer competitive preferred smoker rates. An independent agent will always keep a bevy of competitive companies in their portfolio. So is it really a big deal if you don’t get the absolute best rate?
Using myself as an example rapidly crashing in on age 56 and generally in preferred health, let’s assume I want a $500,000, 15 year term insurance policy. Transamerica and Western Reserve would lead you to believe that it’s a competitive world for smokers my age. They both would offer a price of $3555 annually. They want the business and apparently want it a lot since the next best premium would be from Ohio National at $4425. When you are down to the 10th best preferred smoking rate, Security Mutual at $4865 annually you’re nearly 30% higher than the best rate. I guess the answer is yes, it is a big deal. It pays to shop.
Just to point out the difference between smoking and non smoking, a non smoker would be just $1160 annually and there are 30 more companies within $200 of that. Think there’s a difference in mortality risk?
With smokers it seems that it is all about companies wanting to round out their portfolios. They have enough preferred plus business and they have enough impaired risk business (not so healthy), so they will lower their rates on smokers long enough to get a balanced quota there. You never see a company that is consistently on top. They go there and get what they want and then they get out before their risk pool becomes unbalanced.
Bottom line. All of that is to say that if you don’t have an agent who is willing to shop for you and, more importantly, they are willing to place your business with those companies that want it at the time, you could easily end up paying 30% more than you need to. That second part, placing it where it needs to be, isn’t as cut and dried as you might think. A lot of agents only handle a few companies and aren’t willing to get appointed with the new top dog to win the day for you. Many of the competitive cases I’ve won have been when I find the new top dog, get appointed and quote them, blowing away the competition…..for you.