The 70% savings lure in life insurance advertising is probably been so used that it is a brand by itself. Never mind the companies the promote it, who wouldn’t want to save 70% over what they are currently paying for a comparable life insurance product.
So, the good news is that it’s real. Let’s look at all the ways that life insurance savings can be found, and where the biggest savings are, starting with impaired risk life insurance. Impaired risk is nothing more than having a health issue that companies may or may not look at as an extra mortality risk.
We’ll start with a simple comparison. For all of these I will be using a male age 50 looking for $250,000 of 20 year guaranteed level term. If a client has well controlled blood pressure virtually all companies would put him in a preferred rate class. Provident Life would approve that policy at $1525.00 annually. If that person came to me I would recommend Banner Life at $505.00 annually, a 66.8% savings. Let’s say the client didn’t have anything wrong with them at all and bought the policy from their buddy that represents Assurity Life. His annual cost would be $1255.00 and again if he came to me Banner would be at $505.00, a 59.7% savings comparing the best rate classes of two companies.
OK Ed, where’s the 70% savings? Well, how about someone with moderate well controlled sleep apnea. Most companies are a best case standard rate for sleep apnea. If they approved at a standard rate Provident Life would be at $2077.00 annually. ING is a pretty good bet at their best rate class if there aren’t any other risk factors, $535.00 a year, a 74.2% savings.
The largest real savings will always be found in the underwriting differences and pricing of different companies. Of course I can make all of those numbers a lot closer if I use the two best rates I can get. I don’t write for Assurity or Provident for what I believe are pretty obvious reasons. For instance that sleep apnea life insurance case could also get Prudential’s best rate class at $555.00 a year, a 3.6% savings. The two best rates with no risk factors at all are Banner and Savings Bank Life at $505.00, a 0% savings. But if that person had controlled high blood pressure Minnesota Life would come in second at $555.00, a 9% savings.
So, there is money to be saved by choosing the right independent agent that chooses the right company and your time is well spent on a second opinion if the first quote kind of kicks your gag reflex into high gear.
While I am a big advocate of choosing a term length that meets your needs, if budget is your driving force, a shorter term can save money. Using my same guy I drug through the impairments above, we’ll anoint him with perfect health again. Just so no one thinks I always say Banner has the best rate, lets say he has a 20 year term with SBLI but needs to save some money. He could go to a 10 year term with SBLI at $280 annually, a 44% savings.
And then we have to take into account our friends that love whole life. Northwestern Mutual’s whole life policy for our client would run over $5000 a year. NWM agents like that since they are paid a percentage commission. You’ll be hard pressed to get them to talk about their 20 year term product at $694.50, an 86% savings. Commission on that term policy would be about $600 and $3750 on the whole life policy. Hmmm! If I don’t have the client’s best interest in mind, which one would I push?
Bottom line. There are huge savings out there, some of them a sleight of hand but plenty of valid good deals. Do your due diligence and never be afraid to replace a bad deal with a good one.