One of the main objectives of Prudent Money is to tell you the other side of the story. Today, let’s talk about term life insurance. Getting back to the basics, term is the most inexpensive life insurance you can buy. With term insurance, you are paying just for the insurance and nothing else. It is basic life insurance designed to cover you for a specific time period, which is traditionally 10, 20, or 30 years.
Most people are paying too much for their term coverage. It all comes down to knowing the other side of the story. A great deal of miscommunication comes from commercials. Commercials that are designed to market life insurance are not always accurate in what they say. Human nature causes us to take their marketing messages at face value since they are on the radio or TV.
Here are some of the claims:
“We can get you pre-approved for life insurance.”
First of all, the vast percentage of life insurance policies are not pre-approved. I only know of one program that is designed that way, and it is considered one of the first of its’ kind. Thus not accurate to suggest that in all situations, you can get pre-approval.
“We can get you pre-approved even though you have had cancer.”
This claim comes from one of the more well-known life insurance quote services. The agent on the commercial states that he was able to get approval and a better quote for someone who has prostate cancer. First, only a handful of companies write insurance on men who have had or have prostate cancer, and it is difficult to get. Second, with cancer in your health history, you definitely don’t get pre-approval.
“We can get you the cheapest insurance on the market.”
This particular commercial claims they offer an easy, quick way to get the cheapest insurance on the market. They state an age, a male, number of years that they lock in the premium, and the cost per month that; with that information, I could go to my channels and find out if it was the best and cheapest life insurance on the market. It was not even close. In fact, it was roughly 20% higher in price. Also, the process can be easy or difficult. It depends on a lot of variables.
“They only represent one company.”
This isn’t a benefit to deal with an adviser or agent that just represents one company. Term insurance is highly competitive. The rate that you are offered prior to underwriting is based on a lot of variables. Some insurance companies offer better rates depending on those variables. It is almost impossible to get the best rates without the ability to scan the entire market.
Bottom Line: Be careful trusting a company with what I call irresponsible marketing. If they will say anything to get you to call in, there is no telling what other corners they will cut. Just make sure you are getting a good deal on your term insurance, even if you have had it for a long time. If you want a second opinion, we can connect you with a resource. Just send an email to firstname.lastname@example.org