$12 a month! 70% lower life insurance rates! Just pennies a day! Between the internet and tv there can’t possibly be a person left that doesn’t know that somehow, somewhere people might qualify for really cheap insurance. But how do you know when you’ve applied and been approved for a life insurance company’s best rate class, that you actually have received the best rate available to you?

I would normally aim this right at the big on line agencies but they are just a large part of the problem in this issue of whether you are honestly getting the best rate available. The truth is that independent agents can be guilty of quoting favorite companies and the companies themselves promote this by occasionally offering bonuses when their application supply is running below normal.

So let’s break it down and see how this slightly dishonest behavior manifests itself and a little gold nugget I’ll offer, a place where you can check and make sure they are shooting straight. Let’s start with my favorite, the big on line agencies. They all claim to have access to all the big life insurance companies. Most of them proudly display the logos from those companies on their websites. But do they really quote you the best possible rate every time, or do they perhaps favor one company over another once in a while.

I’ve shared my personal experience working with Eterm.com, an online agency that 15 years ago was the Selectquote of the day. Their website showed an absurd number of companies that they represented, but they had this bonus contract with Federal Kemper and amazingly enough, with the small exception of impaired risk cases that Kemper didn’t want, they got all the business from Eterm. I asked the owner of Eterm about that after I was there for a while and he explained that he got 95% of the first year premium on each case we wrote and if we met the contract goals in a calendar year, he got a 40% bonus. As absurd as it sounds, this guy was pulling down 135% first year premium compensation from Kemper. At that time Kemper was probably the best rate available 10% of the time.

I have, on occasion, accused several of today’s on line agencies of the same junk, sticking clients not just with a second best rate, but sometimes a rate that isn’t even in the top 10 available. Most of them don’t engage in discussions with me, but I have had only one deny having that type of contract. Last year ING Reliastar made a big push to do the mega business with the mega agencies and I don’t know what the bonus was, but suddenly ING was being quoted when they weren’t even close to the best rate and at a time when their underwriting was taking a nose dive. ING, in 2011, had claimed that they were going to take over the underwriting world with best rate class approvals for type 2 diabetes, sleep apnea,  mood disorders and a build chart that no other company could match. That’s probably what got all of the big agencies on board. Since then their rates have gone up and their underwriting has bailed on those promises and hundreds of thousands fell victim to it because they thought the mega agencies were really in it for the customer.

Independent agents can fall into the same trap. A good example is Prudential. Pru is very strong in several impaired risk areas, but they are often passed over because they only have one compensation level, 75% of the first year premium. Just about every other company they are competing against is paying that on a 10 year term and anywhere from 85% to 105% on longer terms. I’ve been beat up by my peers because compensation isn’t part of my equation. They explain to me that instead of $100,000 I could be making $120,000. Why in the world would I leave $20,000 on the table?

Bottom line. It goes something like this for me. First place in a contest for your business pays something and second place doesn’t pay anything. If I always quote the lowest rate available I never come in second. Oh yah! How to keep them honest. There is a computer quote engine company called Compulife and they have their own website that is nothing but a quote engine. Go there for a second opinion. If you have any questions or would like some conversation with your second opinion, call or email me directly. My name is Ed Hinerman. Let’s talk.

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