#3 Compare Small Subsidiaries of Larger Parent Firms
Are the companies you are comparing small subsidiaries of larger parent firms? This is a very important. Many large companies are forming alliances with smaller companies to sell specialty products, such as term and term-like insurance. While only a fraction of the size of its parent, a subsidiary often inherits the financial rating of the larger firm. When you buy insurance in this way, you are actually buying from the subsidiary company, not the parent company. If the parent company later sells the subsidiary, the security and rating of the parent company is lost. It also means that the sold company, not the parent, retains your insurance policy and the guarantees that go with it. While the parent and its subsidiary are not married to each other for “better or worse, ” as a policyholder, you are married to the subsidiary as its insured for 10 or 20 years or even longer. The A.M. Best’s Insurance Reports – Life/Health Edition (United States) is a good source and you can find a copy at your local library.
#4 Check the Guarantee on Life Insurance
Read your insurance contract carefully! Most people assume that the rate they lock in for 10, 20, or 30 years is guaranteed, but sometimes is not. The rate may be guaranteed for x-number of years but not the full extent of the policy term. It’s possible a company can advertise a twenty-policy and post a rate for those twenty years. However, a closer reading of the policy reveals that the company does not guarantee that rate for the full twenty years. The “guarantee” period could be three, five years or ten years. That means the rate at the beginning of the policy term could skyrocket after the guarantee period is over. All plans quoted on AmericaQuote are guaranteed for the full level-term period.
Here’s another suggestion. If you own a term policy that is 5-8 years old or longer and are in good heath, it’s time to shop again. Rates have dropped considerably in that period.
Also, consider consolidating coverage. If you have a few policies, you can take advantage of company volume discounts by combining everything into one contract. Typical discount levels are $100,000 – $250,000 – $500,000 and $1,000,000.
#5 What is the Actual Cost of the Life Insurance?
Only after first establishing financial stability, subsidiary status, and rate guarantee should the issue of cost become a consideration. Here’s a very important point. We get many calls from viewers asking if we offer the lowest rates for any particular carrier. Most people don’t realize the premium for a policy from the same company, in the same health category will be the SAME regardless where you buy it; online or locally.
If an insurance agent advertises “Lowest Rates,” don’t believe it. Buying insurance is not like buying a car. There is no haggling! A policy offered by the XYZ company and sold by numerous agents is always sold for the same price. Agents are not allowed to discount the cost of the policy (or lose their license). The company originating the policy posts the rates with your state’s insurance commissioner and the rate cannot be changed by agents. The same policy, in the same health category, with the same benefits and terms will be the same price from any agents. If you buy a policy directly from the company, the price is the same. In this case, the company keeps the commission (so much for loyalty to their agents).
Let’s say the ABC Company offers a policy to the public. Every broker or company selling that product must offer it at the same price for that particular health category (even if you buy it directly from the company). If you go to several sites, the premiums quoted for that ABC policy must be the same for that health category.
Where you will see differences from site to site is in which health category they quote. That’s why you need to be aware of what the underwriting requirements are for multiple companies. That’s where a good broker (like us) comes in. With expert advice, you can be sure you will receive the best possible rate.