Big old double asterisk here**. In consideration of replacing your life insurance policy with a new one that has potentially better rates or more death benefit or a longer (or shorter) term length, NEVER, and I really mean never, cancel the policy you want to get rid of before you have the new life insurance approved and in force. You and I both know that is the most prudent way to make the change from one life insurance policy to another. We also know it doesn’t always work out that way.
The primary reason people change or replace their life insurance is because the cost just isn’t working in their budget. That happens when 1. You are quoted one thing and the end underwriting result produces a life insurance policy that is a higher cost. Sometimes much higher. Or 2. Someone talked you into a product that sounds like it will make you wealthy if you just commit a ton of money to it. This is the unfortunate selling point for indexed universal life insurance, a product that sounds too good to be true, and is, but is the best bait out there. So both of these budget busters in life insurance can be fixed so let’s break down the problems and solutions.
- You were quoted one thing and approved at a much higher rate. Believe it or not this happens more often than being quoted a price and getting life insurance approved at the quoted rate. The reason, and please forgive my industry for condoning this, is that agents know that you want to hear the best rate or you are likely to go in search of a life insurance agent that will make you feel good. So most agents knowingly quote a rate that they are pretty sure won’t fly but it makes you feel good enough to apply and take an exam and go through underwriting and wait for an approval. They have learned that when they then deliver the life insurance bad news on the approval, you are more likely to take it than want to start over. Often the life insurance agent will fend off your request to look elsewhere with something along this line, “Now that this underwriter has approved it at this higher rate we know that’s likely as good as it’s going to get so you might as well take it”. If they aren’t willing to shop it, bid them a fond adios and call someone like me that shops every case before I quote it.
- Indexed universal life, like its’ older cousins traditional universal life and variable universal life, are all sold on the premise that if you throw a lot of money at something that is tied to some kind of an investment you will not only have life insurance but untold and unguaranteed riches not too far down the line. A good rule of thumb with life insurance is, if it isn’t guaranteed it very likely won’t happen. Every universal life policy illustration has to show what is guaranteed and what is not guaranteed and most of the successful agents (that doesn’t equate to successful clients) don’t talk about what is guaranteed because a person would obviously never buy a universal life policy based on that. So they focus your attention on the non guaranteed numbers that are radically different. These products don’t sell well because they work well. They sell well because the life insurance agent doesn’t care about your future, just their commission, making them salesmen, not agents.
Bottom line. Whether you’ve been treated wrong in underwriting or bamboozled into a policy with big promises and no guarantees, I’d love to hear your story and work with you to fix it. You can call or email me directly. My name is Ed Hinerman. Let’s talk.