Another overly diligent life insurance shopper shot themselves in the foot today. Remember, three things can happen while you are looking for the best possible rate. One of them is good and I’ve seen people even turn that one against themselves.
1. The good one. Nothing happens. You just keep shopping and shopping and shopping and you finally settle on the one you want and you apply for it. You’re still in great health and you’re obviously not dead, so you’ve done your job. Well……sometimes. You see, most people who haven’t been around life insurance much think they are good to shop or good to wait until they buy until their birthday. Everyone knows that life insurance goes up with age, right? No! Most companies use the age nearest method to compute your insurance age. So, if you are 49 and 183/365th’s, you are really 50 with most insurance companies. I’ve seen plenty of diligent shoppers have to make their purchase at an age one year older than they needed to.
2. Your health changes. I just had a client who shopped it until he finally came to the conclusion that mine were in fact the best rates. He called up to apply and asked if it made any difference that they had found a melanoma on his back the week before. This guy had been trying to beat my rates for 2 1/2 months. He will now never see rates like he could have had and it will be some time before he can get an offer at all, depending on the pathology results of his cancer.
3. You literally shop until you drop. I’ve had far too many calls from widows or children who found quotes and a business card in the deceased’s important papers. The papers weren’t important enough to do anything about. Still thinking about it!! Waiting for one more set of quotes!! Trying to lose 10 pounds!! None of those things provide protection for your family.
Life insurance isn’t like a car or a house. If you buy one of those and make a bad choice, you are either going to lose money or you are just stuck with something you don’t want for a long time.
With term insurance you can get something in force and then shop around, lose some weight, think about it, whatever. If you find something better, you can apply for that and if it actually turns out to be a better deal, drop the first one and accept the better deal. No penalties. No loss.
I would suggest that if you are going to purchase with the idea of covering your family until you make sure you have the best deal, pay for it monthly or quarterly. If you pay annually, in some states the insurance companies are not required to refund unused premium.
So, do the right thing. Cover your family first. Enthrall yourself with your shopping prowess after that.
This post is somewhat dated. Life insurance underwriting is changing and evolving continually. For more updated information check out some of the key word links. If you have a specific question or topic you need information for do a search. If you don’t find the answers you need contact me and we’ll make sure you get the information that is important to you.