How Can You Know If Your Life Insurance Agent Is Quoting Accurately?

As much as I run across this, it’s sad to know that there are probably as many inaccurate life insurance quotes given each day as there are accurate life insurance quotes. The reason is that most life insurance agents don’t know how the underwriting works with whatever company or companies they are quoting.

So what’s a consumer to do? Going with an agent that quotes inaccurately is a waste of your time and the company’s time and money and the part I just don’t get is that, inevitably, when the price gets approved at a higher rate, the agent probably won’t be able to place the policy so they won’t get paid. So everyone has wasted time and money. How can you hold an agent accountable for what they quote?

First, tell them that if the approved policy has a different rate than their quote, and the rate is changed due to information the agent already knew, you aren’t taking the policy. If an agent does their due diligence up front in getting your health and family history, the only way a quote should change is if something comes up on the labs that you didn’t know about or something comes from your medical records that you knew about but forgot to mention. In those two cases the agent is off the hook because no one knows the labs before they are done and the agent doesn’t know what’s in your medical records. Now understand, I’m not saying at that point that the agent is right and they have the best rate.

Different companies treat lab results and medical information differently. If your rate goes from preferred to standard based on some lab result, your agent should check other companies to see if, given the same result, they will do better. A good example would be liver functions. Insurance companies run three liver function tests, GGT, AST and ALT. The normal range for GGT 0-65, AST 0-50 and ALT 0-60. If you take an exam and aren’t aware of your liver functions being abnormal, say GGT 100, AST 75 and ALT within the normal range at 55, you might have been quoted preferred plus rates at $1000 a year, but the approved rate with almost all companies would be standard at around $2000 a year. Once your agent knows those values they could suggest reapplying with Prudential where you would drop back down to preferred plus at $1000 a year or, like most agents, they can tell you that’s as good as it gets. Might as well take it.

Whether quoted over the phone or in person, ask the agent to show you how they came up with the rate they did. We all have underwriting guidelines and I’ve sent out plenty of copies of mine over the years to explain why my quote is different from another agent’s quote. If an agent isn’t willing to show you in an underwriting guide (easy reading) how they determined your rate class, they are shooting from the hip and you might as well just walk away.  Make them show you why they chose one company over another. Ask them to tell you what compensation they get with the company they recommended and how that compares to other companies in the mix.

If you have some health issues, insist that your agent shop the case to at least 10 or more companies and show you the answers from underwriters. If they aren’t willing to shop it they aren’t doing all they can for you and if they aren’t willing to show you the results, they’re hiding something. I’m working on a case right now where a client got a quote from another agent and that agent quoted them a standard rate from ING. The agent didn’t shop it, just shot from the hip. I shopped it and came up with a standard rate from another company as the best tentative offer. I divulged everything and it was a complicated enough case that it would be a superhuman agent that could have guessed the right rate class. In my process I also got a quote from ING and they said they would be tentatively at table 4, twice as high as the rate this client was quoted by the other agent. Anyone who follows ING underwriting knows they have gone from aggressive to completely overly conservative in the last year.

Bottom line. Be suspicious if your quotes seem lower than you thought they would be. Agents quote low all the time to get your signature on an application in the hopes that you won’t bail if it comes back higher. Make it clear you will bail unless the higher rate is your fault (labs or records). If you have any questions or are going through this right now and want to get it fixed, call or email me directly. Let’s talk.