Yes, that’s right, secrets. Here are a couple of secrets to help you when you’re shopping:
1. Internet Term Life Sites Always show you teaser rates
If you start your search for a new Term Life policy like most people do, on Google, you will end up on any number of sites promising the best Term Life rates. Some will even talk about the “price war” between carriers, etc. Most will allow you to get a quick quote. BEWARE: Every carrier has many rating levels, such as Super Preferred, Preferred, Standard Plus, Standard and so forth. But what you will see on term life quoting engines is almost always the Preferred Best rates, which few people actually qualify for.
Isn’t it a bait-n-switch, and wouldn’t most people be ticked off when they get their final approval at something more expensive? Yes and yes. But these sites (Insurance Brokers with a website) are betting that once you’ve gone through 6 weeks of underwriting, releasing medical records and a nurse’s visit… that you’d rather just take the policy and move on than re-apply and go through it all again.
But you don’t have to rely on teaser rates. A good broker (ahem, us) can walk you through a little pre-underwriting and determine a proper expectation of rate before you go into underwriting. If your dad and mom both had cancer, you’re not getting a Preferred rate. Let’s just discover that up front – no surprises.
2. Nobody has an exclusive deal, or the best rates on Term Life Insurance
Any good insurance broker (again, Purves Insurance…) will be able to give you a quote with all of the most competitive Term Life carriers. Yes, Dave Ramsey fans, I can give you the same policy at the same rates as his preferred Term Life broker. The secret is that once we establish that Banner Life, for example, has the best policy and rates for you, the application process is the same with me, Super Term Life Busters.com (I made that up) or your brother in law who got his insurance license last week. Now, we have recently found a program that streamlines the process and makes it less painful for everyone, but the underwriting process ALWAYS will include these things:
A. Application (may be online, may be submitted by me, may be old-fashioned paper – more often now it’s a phone interview with the carrier)
B. Nurse’s visit – they will take a little blood & urine, ask health questions
C. Medical Records – The life insurance carrier isn’t going to take your word that you never were treated for anything bad. That’s just the way it is.
Once the underwriter has all 3 of these things, they will compare the data to their (very inflexible) underwriting guidelines and issue a “rate determination” and an “offer”. For example: We have determined that you are a Standard risk and are offering a 20-Year term policy for $500,000. You can then take it or leave it. But whether you bought the policy with Purves Insurance or your brother in law, the underwriting guidelines are fixed, non-negotiable and the same.
The value of a great insurance broker is NOT in giving you a cheap quote, but knowing which company is best for you up front, setting the right expectations and also knowing what to do when your chosen carrier comes back with a bad surprise. That, my friends, is where experience and knowing who you are dealing with makes all the difference in the world.
In the next part of Term Life Secrets, I’ll discuss conversion and Term UL policies, and why it’s not always about price with Term Life Insurance.
Purves Insurance is located in Davis, CA and hates underwriting surprises as mush as you do.