You're over 50 years old and looking for life insurance. Whether you are replacing coverage or getting new coverage, with so many different options available, how do you know you are getting the best value?
For our example we'll us age 55 and look at both smoker and non- smoker rates. The rates for the exact same coverage vary drastically. We will look at the top quotes for a level term policy, where the face amount and the premium remain the same for the life of the term period. We will use a preferred rating for these quotes.
- 51 year old male non-smoker- $250,000 coverage for 20 years- prices range from $76.97 to $609.00 per month.
- 51 year old female non-smoker- $250,000 coverage for 20 years- prices range from $55.90 to $448.49 per month.
- 51 year old male smoker- $250,000 coverage for 20 years- prices range from $362.92 to $851.08 per month.
- 51 year old female non-smoker- $250,000 coverage for 20 years- prices range from $284.02 to $654.24 per month.
Okay you get the point, for the same coverage the prices really vary even though it is for the exact same life insurance coverage. I know we all would rather pay the lower cost for our insurance!
Why Are The Quotes So Different?
Every company sets their rates with each state department of insurance so that the rates are fixed by age, amount of insurance, term of insurance and underwriting rating. Each company determines how much they will charge based on their own formula. They have an idea where their rates will fall in the list of carrier premiums.
A carrier may decide they have more policies on the books for a certain group than they want. In that case, they might raise their prices in that age group to balance their portfolio of policies. They may change underwriting criteria as well to increase or decrease holdings for a certain demographic.
We find that there are several carriers that we routinely show up as the lowest cost carriers. Although they are consistently the lowest cost, they have some differences.
How Can I Get the Best Value?
What does the best value mean? Life insurance policies have some built in benefits. Here's a brief discussion of some of the more important ones.
Most term policies have a time period where you can convert all or part of your policy's face amount into a permanent policy without any underwriting. Your new permanent policy will be at the same underwriting rating as your term policy using your current age (when you make the change).
Some companies allow conversion for the entire level term period up to a maximum age which can be anywhere from 60 to 75. Some only allow for part of the level term period. The carrier may allow you to convert into any permanent policy they have or they may limit your choices. If you become uninsurable during the term period, you can convert, assuming your policy still allows it. You can see that this is an important consideration.
Accelerated Death Benefit
Some policies come with a free rider that allows you to use part of the death benefit if you have a terminal disease. They differ in the amount of money you can access, the fees for doing this, and how long you have left to live, to be able to access these benefits. (Using this benefit will lower the amount of insurance your beneficiary will receive upon your death, but it can be very valuable if you are no longer able to work.)
Some policies allow you to access part of the face amount of your policy for chronic illnesses and critical illnesses. There are only a few policies where these benefits are available.
These benefits are not available in all states.
There may be other riders that interest you as well. Every carrier has it's own set of additional riders that you can add to your policy. These riders will add to your premium cost.
Getting a good value has to do with getting the term policy that has riders that add benefits to your policy that you find important.
How Do I Get a Good Quote?
There are different options for getting quotes.
- On-line quote engine
- Captive Agent
- Independent Agent
Each of these methods has their value.
On-line Quote Engines
On-line quote engines generally have a limited number of companies available to quote. It may be that the leads go to an in-house call center, so by limiting the number of companies they do business with they can get higher commissions. (The more business a brokerage gives an insurance company, the higher contract available and higher bonus options too.) Even if the leads are sold, there are usually a limited number of companies shown.
A captive agent works for one insurance company. They can only offer you products from that one company. Obviously, there is no competition here...they don't have many options.
An independent agent has a quote engine not available to the public. It shows many more carriers than you can easily quote for yourself. This is advantageous for several reasons.
The independent agent...
- Works for you.
- Has many carriers to choose from.
- They know the financial ratings of the companies to steer you to a strong carrier.
- If you have any medical issues, they will know which carrier will work best for you.
- Whatever you are looking for, whether it's the strength of the company, or a special rider, or anything else, this agent has the most options to help you find the right carrier for your insurance coverage.
How Do I Know I Got a Good Deal?
If you are working with an independent life insurance agent you can ask to see a printout of the quote. You will see up to the top 100 or more carriers who offer life insurance over 50. You can know that you got the best price available to fit your specific situation and needs.
If you don't get approved at the rating you expected, your agent will be able to find out the reason why. Changing companies may be all you need to get the original rating. If the rating you were given is reasonable based on your medical history and exam, they can give you a new quote with the new rating. If there is a lower cost carrier, you can easily apply to them using the same examination that you took for the first application. This way you are in control and able to make a sound decision.
We also have an in-house independent underwriter to help us with your application. They can talk to insurance company underwriters about your case (while agents cannot). They can review your records and make recommendations.
We do everything we can to get you the best deal on your life insurance policy.
The Bottom Line
Life insurance for people over 50 has a wide range of pricing. To be certain you get the best premium available for your specific situation we recommend working with an independent agent. They work for you to get you the best coverage available at the most reasonable pricing.