There is a misconception in life insurance that there is a common thread running through all the companies and kind of like buying hamburgers, they’re all pretty much the same and all of them charge about the same. The truth is that the differences between life insurance companies is as stark as going through “It’s a small world” at Disneyworld. You know they’re all singing about life insurance, but every corner you turn brings a whole new view of it.
I will provide one common thread through this whole thing. We’ll use my birthdate, 3/14/53. So, we’re talking about a 54 year old male. (218 shopping days until my birthday). We’ll use a $500,000 policy as a basis.
If I am shopping for the best term insurance policy, the price could be as good as $785 annually for a 10 year term with North American or as much as $1700 annually with Western-Southern. No difference in those policies except that one company makes a lot more than the other and, I suspect, the agent for Western-Southern gets a higher commission rate.
On a 15 year term the rate could be as low as $1055 annually with American General or as high as $1955 with Americo Financial. On a 20 year guaranteed level term it could be as low as $1360 with Banner Life and as high as $2940 with Provident Life and Accident.
So, why would anyone buy term insurance from Western-Southern, Americo Financial or Provident? It happens all the time when people don’t use an independent agent and are never told that they could pay more than twice as much as they need to. Just a clue about independent agents. We represent a lot of companies so that we never have to offer a customer anything but the best possible deal.
Let’s assume next that I have type 2 diabetes. All of my risk factors are good and the diabetes is well controlled with an hbA1c of 6.2. It was diagnosed two years ago. The best offer in the business is going to come from Banner Life. The price for that $500,000 of 10 year term will be $1305. The 15 year term will be $1665 and the 20 year term will be $2155. One of the consummate leaders in the term race, Genworth Life and Annuity would take a whole different view of the same situation with a 10 year term price of $2245. Their 15 year term would be $2775 and the 20 year term would be $3525. This, by the way, was not a best case/worst case scenario. While Genworth certainly takes a harsh view of well controlled diabetes, there are a couple of thousand companies out there that would have higher rates than those, if they would insure you at all.
There is a huge difference from company to company on price and on underwriting.
One more example that is stark to say the least. Now I am clean as a whistle except that I have mild obstructive sleep apnea. I use a cpap and the apnea is well controlled. Prudential is my company here because they will allow their best rate. My $500,000, 10 year term is $795, the 15 year term is $1090.00 and 20 years is $1375.00. In contrast, if I used North American the 10 year term would be $1580, 15 years would be $2225 and 20 years a whopping $2875.
But, in all fairness to North American, there really isn’t a company around that does a better job for private pilots. It’s a small world after all!!!!!!!!!
Bottom line. If you’re not using an independent agent who stays on top of underwriting changes, you’re leaving money on the table.
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.