I got an application in the mail yesterday from a Garden State Life It came with a (dang it) non-negotiable sample death benefit check and all of the emotional verbiage they could come up with in order to convince you to act now and don’t take time to check out the competition.
Their product is laughably called BudgetGard. They must be talking about the company budget because they get to save the cost of a life insurance exam and then turn around and provide you with a viciously overpriced and poorly guaranteed term insurance product.
Like our friends at AARP they seem to have embraced the logic of getting people into a term product with rate increases every 7 years that ends at age 80. While there is a conversion option that lasts to age 65, there isn’t any mention of what that product is or how huge the price is.
They mention in their compelling argument that “Some of those other term life plans you’ve seen elsewhere may require you to take and pass a rigid medical exam to qualify for coverage. Not so with BudgetGard. No medical exam is required!” So, what are you really gaining by not getting the free exam? A normal life insurance exam is done at no cost to you and consists of blood and urine specimens, a check of your height, weight and blood pressure and a review of your medical history.
Well, you have to answer all the medical questions for this company anyway, so that’s no big deal. If you check anything at all for health issues they have the right to obtain your medical records and everything in there is fair game for declining your coverage. Even if you say no to all the health questions they can still find information on you in the Medical Information Bureau (MIB). No exam is not code for guaranteed issue.
So, if you are moderately healthy you are far better off taking an exam that in most cases will get you better than standard rates. If you qualify for better than standard rates $100,000 of 10 year term at age 55 could cost you as little as $20 a month. If you were no better than standard it could cost you as much as $44 a month. This company’s price for $100,000 of 7 year term is $67 a month.
But here’s the real kicker. the company is underwriting you for one rate class, standard. If you are better than a standard risk you still get their standard rate. If you are worse than a standard risk they simply decline to offer coverage. If you take an exam you will get approved at the rate class you qualify for and if for some reason you don’t qualify for standard, traditional insurance offers higher rates so you can still get insurance. Here’s the other real kicker. Those higher than standard rates may very well be better than the company’s standard anyway.
Bottom line. There is no real advantage to “no exam life insurance”. It is an advertising ploy to make you feel like you’re getting away with something when the truth is that, best case, what you will get away with is a policy with terrible rates and terrible guarantees.
That’s pretty low Ed. I’ve read, contributed, linked to and recommended your blog for about the last 2 years. I know you have very strong opinions on things, but to come out and slam Garden State Life and our products like that is pretty low. While we are not friends, we have traded several emails over the past 2 years and I would have loved to have answered any questions about the mail kit or the product you got, but instead I guess we’ll just let your readers guess what facts in your post are accurate and which are made up to prove your point. You may claim to be a whistle blower or someone who believes in life insurance education, but you are just trying to sell what you sell and make everyone else look like a crook.
Michael,
There was no intent to “go low” on you. I respect your opinion and have never deleted any comment you’ve made even when we disagree. This is no exception.
I believe I fairly analyzed the product, just as I will respect and allow my readers to not only read your thin skinned response above, but a vigorous defense of Garden State’s mailer and product.
1) On your point about risk classes and the fact that we only offer a standard risk class. In the past Garden State has tried to market products with multiple risk classes. In a direct response world those types of products just don’t work. An agent can work with a client and set expectations on what class they can expect to get. In a direct mail and aggregator world the consumer will always assume they are going to qualify for the best rate and not purchase when they don’t.
2) On the no exam point. In the past Garden State has tried to market fully underwritten products. In a direct mail, direct response world more people fail to follow through with the exams when they don’t have the agent there to push them through the process. We got eaten alive in fees for canceled underwriting exams and wasted medical record orders.
Naturally if someone goes through a full medical underwriting process the company is going to know more about their future mortality than if they don’t. Naturally the rates are going to be more.
3) I’m not sure where you get off questioning our guarantees. We have an A rating and our parent company American National does as well. Garden State has been in business for over 50 years and American National has been in business for over 100 years and was recently listed as one of Forbes.com’s most trusted companies. While you got a solicitation for our 7 year level product we also send out solicitations for 15 and 20 year level term products. Based on which product people choose when offered all 3, most people in your age bracket prefer the 7 year product with the lower rate and younger people in their 20s and 30s prefer to pay the slightly higher rate and get the 20 year level term.
4) As to your statement about the product being “viciously overpriced”. This product was priced to support the direct mail costs to market it and the simplified issue mortality. The price directly supports the product offered. If people would just walk up to our front door and offer to buy our insurance and take a medical exam then I guarantee you we would charge a lot less than any product you sell today. Just like the companies you work for pay you commission as the bulk of their marketing costs we pay the cost to direct mail insurance offers of which only about 4 of every 1000 ever respond too. The other 996 may not care about life insurance or they may have already been reached by an agent such as yourself that walked them through the process and got them the best rate for their situation. Those people are taken care of, they have quality coverage and our product has nothing to offer them at that point. But what about the 4 that responded to us that need insurance just as bad as your clients and honestly I think a 55 year old paying $67 per month for $100,000 of life insurance is better than not having it at all if they need life insurance. So if the option is life insurance that costs more but is still reasonably priced or no life insurance at all then I think the latter is better and I dont’ think that makes Garden State Life a crook or vicious.
We reach people that other distribution channels like yourself don’t reach. I understand that you will want to educate your audience that you can provide them a lower priced fully underwritten product, but to label Garden State Life as a crook or some kind of predator is just plain irresponsible and wrong.
That’s more like the Michael I know. I agree that a 55 year old paying $67 a month for $100,000 is better than nothing. I’ve always maintained that something is always better than nothing.
Having said that, my goal is to reach everyone I can and let them know that $67 a month isn’t necessary, a 7 year guarantee is a terrible guarantee, and buying insurance without an exam is a convenience that isn’t worth the price.
Your summation that I labeled Garden State as a “crook or some kind of predator” is, I think, you being a little think skinned again. In fact I support people in purchasing their life insurance through Garden State….if it’s the only insurance company or exposure to life insurance they’ve ever had.
I really appreciate Ed’s input about the company. I just filled out the application. I don’t think I will send it in. Why do they need to know how much my current life insurance amount is? Why do they need to know a person’s income? Why can’t you have at least 1 other benificiary in case there is a problem with the first one? Sounds a bit shaky to me. I think I should stick with New York Life. I used to work as a Paramedical and the health exam is really no big deal.