There are a number of ways you can end up paying too much for your life insurance, but the biggest factor is that we just get used to the payment and for many of you there is no servicing agent to point out ways to pay less. I just want to go over 6 ways to reduce the cost and if any of them ring true for you then maybe it’s time to overcome the gravity of being used to paying too much and make a change.
- As a life insurance agent it is sometimes hard for me to fathom the application process as being a hassle, but some people feel that way. The truth is that from quotes to an approved application should take no more than a few hours of your time (that includes the exam). So, taking that into account, the first way clients end up paying too much for life insurance is by accepting an approval that, while it doesn’t seem right or fair, at least puts a period on the end of that life sentence. You have life insurance. That was the goal and even though it is more than you budgeted or anticipated paying, well, that’s life. At the very least if your life insurance approval doesn’t seem fair, a second opinion is quick and easy to get. The second opinion can be easily provided by an independent life insurance agent by completing a quote request form and allowing a few days for the agent to shop it. There are times when clients find out the offer was fair, but far more times when the adage, “if it doesn’t seem right, it probably isn’t” holds true.
- A little further along in owning your life insurance policy is where a lot of chances to save money are missed. Often life insurance applications are approved based on that snap shot in time. The snap shot could catch a lab result like your cholesterol/HDL ratio being 5.2 instead of the 5.0 it takes to get the best rate. That could cost 30% more than you need to pay and while that is reality at the time you apply, chances are it won’t stay the same. It’s worth a set of labs to see where your ratio is down the road a year or two. If it is back to 5 or under you can apply and get approved for the best rate class and put that 30% in back in your pocket. Probably the most important thing you can do to set up a future decrease in the rates you’re paying is to find out exactly what caused the initial increase and what threshold needs to be met to get a better rate. It simply isn’t true that once approved, that’s as good as it gets.
- Chances for major savings happen when clients get used to paying a price, usually a flat extra charge, even after the reason for the flat extra charge has gone away. A good example is someone who is taking flying lessons. While they are a student pilot and until they reach a threshold of 100 hours of pilot in command life insurance companies will charge a flat extra charge of $2.50 to $3.50 per thousand per year. What I see fairly frequently is student pilots that never really stick with their quest to become a pilot. It ends up taking too much time or too much money to pursue that dream, so they bag that dream and take up fly fishing. Or there is the case of a pilot who reaches the threshold of more than 100 hours of pilot in command and forgets there was an opportunity for major savings at that juncture. But they have life insurance in force that still has them paying an extra charge for being a student pilot or pre 100 hours PIC. They’re used to the price and forget why they’re paying what they’re paying.
Bottom line. This false comfort with paying too much is why a life insurance agent should be servicing your business on at least an annual basis. They know why you are paying that price and they know the events that need to happen to change it. Good customer service by your life insurance agent, while abused by some agents as a way to sell you more, could and should be a way for them to make sure you always have the most affordable option in your policy. If you have questions or believe you may need a second opinion or some help figuring out why you’re paying too much for life insurance, call or email me directly. My name is Ed Hinerman. Let’s talk.