Life insurance

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Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Life insurance

Post by jaybee9 » Wed Mar 13, 2019 9:55 pm

I am in the process of trying to switch from life insurance through work to getting term life through term4sale.com. I have several questions:

- All else being equal, how do you pick between different quotes where the companies have the same rating but the premium differs by cents or a few dollars? Is it as simple as going with the lowest price or are there other considerations to weigh?

- Do insurers always require medical tests?

- Does formerly having a sleep apnea diagnosis (have since lost a lot of weight) automatically raise rates due to being dropped into a lower health class?

- Are there any life insurance agents that have fiduciary responsibility (e.g. CLU, etc.)?

- Are all the policies level premium on term4sale.com?

- Term policies can be cancelled at any time without penalty right?

- Any other gotchas to watch out for when going through this process?

Thanks for your help.

JBTX
Posts: 5533
Joined: Wed Jul 26, 2017 12:46 pm

Re: Life insurance

Post by JBTX » Wed Mar 13, 2019 11:02 pm

I've heard some people here recommend going through a broker. Not all policies are exactly the same. You may qualify as preferred on one and super preferred on another. The criteria of certain "conditions" can vary from plan to plan. Sleep apnea may knock you down a notch in one but not the other (I have no idea). Also, there may differences in exclusions from plan to plan. Not to be morbid, but some plans may exclude suicide, others don't (typically after two years on the policy). A broker may be able to help you wade through all that.

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BL
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Re: Life insurance

Post by BL » Wed Mar 13, 2019 11:58 pm

Why not consider a local independent insurance broker? They seem to be everywhere, and could do some shopping for you while knowing about how the companies seem to rate medical problems. You don't want one who only deals with one company, if possible.

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Stinky
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Location: Sweet Home Alabama

Re: Life insurance

Post by Stinky » Thu Mar 14, 2019 9:57 am

jaybee9 wrote:
Wed Mar 13, 2019 9:55 pm
I am in the process of trying to switch from life insurance through work to getting term life through term4sale.com. I have several questions:

- All else being equal, how do you pick between different quotes where the companies have the same rating but the premium differs by cents or a few dollars? Is it as simple as going with the lowest price or are there other considerations to weigh?

- Do insurers always require medical tests?

- Does formerly having a sleep apnea diagnosis (have since lost a lot of weight) automatically raise rates due to being dropped into a lower health class?

- Are there any life insurance agents that have fiduciary responsibility (e.g. CLU, etc.)?

- Are all the policies level premium on term4sale.com?

- Term policies can be cancelled at any time without penalty right?

- Any other gotchas to watch out for when going through this process?

Thanks for your help.
I personally used Zander Insurance (zander.com) for my term life insurance purchases. They will be able to answer a lot of your questions, including sleep apnea etc.

Level premium term insurance can be cancelled at any time without cost to you. However, if you were to (for example) buy a 20 year level premium term policy and cancel it after 10 years, then you'll have "lost" the higher premium you paid for a 20-year policy, compared to the premium for a 10-year level term policy (which is cheaper). So you should match the term period to your expected need for life insurance.

To get the best rates, you'll want to go through "full" underwriting. "Full" underwriting varies by both your age and the face amount; the higher your age and/or the higher the face amount, the more underwriting there will be. Some products are available with limited or no underwriting; however, those products are higher priced because of anti-selection.
It's a GREAT day to be alive - Travis Tritt

BruDude
Posts: 3073
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Location: Las Vegas

Re: Life insurance

Post by BruDude » Thu Mar 14, 2019 1:15 pm

Answers below:
jaybee9 wrote:
Wed Mar 13, 2019 9:55 pm
I am in the process of trying to switch from life insurance through work to getting term life through term4sale.com. I have several questions:

- All else being equal, how do you pick between different quotes where the companies have the same rating but the premium differs by cents or a few dollars? Is it as simple as going with the lowest price or are there other considerations to weigh?

Go based on lowest price, but your health history matters when choosing which company to apply with. An independent broker can help with this.

- Do insurers always require medical tests?

No. It depends on your age, the amount of coverage, and your health history.


- Does formerly having a sleep apnea diagnosis (have since lost a lot of weight) automatically raise rates due to being dropped into a lower health class?

Automatically - no. It depends on whether it was considered mild/moderate/severe, the current status, treatment history, compliance with recommended treatment, etc. It is possible to get the best health rating (Preferred Plus) with sleep apnea if mild and compliant with treatment.

- Are there any life insurance agents that have fiduciary responsibility (e.g. CLU, etc.)?

No. CLU is Chartered Life Underwriter, it does not mean there is a fiduciary duty. A good agent will do what is in your best interest though. We don't get referrals from screwing over our clients.


- Are all the policies level premium on term4sale.com?

No, some are annually renewable term, it depends what category you are looking at. If you are looking under 10-40 year term, then yes they should all be level.


- Term policies can be cancelled at any time without penalty right?

Correct


- Any other gotchas to watch out for when going through this process?

Not really, term is pretty simple. Just use a good independent agent to apply, there is no cost to use an agent. It is exactly the same price if you buy directly from the insurer, but if there are any underwriting complications you are going to regret not using an agent. The agent should be able to find you the lowest rate available based on your medical history.

Thanks for your help.

LesBleus**
Posts: 73
Joined: Thu Aug 23, 2018 11:01 am

Re: Life insurance

Post by LesBleus** » Thu Mar 14, 2019 3:37 pm

I'm in the process of signing up for life insurance and had similar questions. You should ask about riders and something call roll on or extension after the term.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 8:07 pm

JBTX wrote:
Wed Mar 13, 2019 11:02 pm
I've heard some people here recommend going through a broker.
term4sale.com gives quotes and 3 independent agents in the area you designate (by ZIP code).

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 8:09 pm

BL wrote:
Wed Mar 13, 2019 11:58 pm
Why not consider a local independent insurance broker? They seem to be everywhere, and could do some shopping for you while knowing about how the companies seem to rate medical problems. You don't want one who only deals with one company, if possible.
I plan to call one or more of the independent insurance agents that I got from term4sale.com

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 8:19 pm

Stinky wrote:
Thu Mar 14, 2019 9:57 am
I personally used Zander Insurance (zander.com) for my term life insurance purchases. They will be able to answer a lot of your questions, including sleep apnea etc.

Level premium term insurance can be cancelled at any time without cost to you. However, if you were to (for example) buy a 20 year level premium term policy and cancel it after 10 years, then you'll have "lost" the higher premium you paid for a 20-year policy, compared to the premium for a 10-year level term policy (which is cheaper). So you should match the term period to your expected need for life insurance.

To get the best rates, you'll want to go through "full" underwriting. "Full" underwriting varies by both your age and the face amount; the higher your age and/or the higher the face amount, the more underwriting there will be. Some products are available with limited or no underwriting; however, those products are higher priced because of anti-selection.
I hadn't heard of zander.com. The thing I like most about term4sale.com is that they give me a list of 3 agents and the option to contact them or be contacted. All the other sites I have seen want too much personal information IMO. Good tip on the underwriting. Thanks.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 8:39 pm

BruDude wrote:
Thu Mar 14, 2019 1:15 pm
Answers below:
jaybee9 wrote:
Wed Mar 13, 2019 9:55 pm
I am in the process of trying to switch from life insurance through work to getting term life through term4sale.com. I have several questions:

- All else being equal, how do you pick between different quotes where the companies have the same rating but the premium differs by cents or a few dollars? Is it as simple as going with the lowest price or are there other considerations to weigh?

Go based on lowest price, but your health history matters when choosing which company to apply with. An independent broker can help with this.

- Do insurers always require medical tests?

No. It depends on your age, the amount of coverage, and your health history.


- Does formerly having a sleep apnea diagnosis (have since lost a lot of weight) automatically raise rates due to being dropped into a lower health class?

Automatically - no. It depends on whether it was considered mild/moderate/severe, the current status, treatment history, compliance with recommended treatment, etc. It is possible to get the best health rating (Preferred Plus) with sleep apnea if mild and compliant with treatment.

- Are there any life insurance agents that have fiduciary responsibility (e.g. CLU, etc.)?

No. CLU is Chartered Life Underwriter, it does not mean there is a fiduciary duty. A good agent will do what is in your best interest though. We don't get referrals from screwing over our clients.


- Are all the policies level premium on term4sale.com?

No, some are annually renewable term, it depends what category you are looking at. If you are looking under 10-40 year term, then yes they should all be level.


- Term policies can be cancelled at any time without penalty right?

Correct


- Any other gotchas to watch out for when going through this process?

Not really, term is pretty simple. Just use a good independent agent to apply, there is no cost to use an agent. It is exactly the same price if you buy directly from the insurer, but if there are any underwriting complications you are going to regret not using an agent. The agent should be able to find you the lowest rate available based on your medical history.

Thanks for your help.
Great point about going direct versus through an agent. So, if I have a list of several agents, how would you pick a good one? The only thing that was different between them all was one had a CLU designation. Which doesn't necessarily make him better although I suppose better trained? I also tried looking up some of the agent's companies on the local BBB with limited success. Not sure how else to vet agents.

Thanks.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 8:46 pm

LesBleus** wrote:
Thu Mar 14, 2019 3:37 pm
I'm in the process of signing up for life insurance and had similar questions. You should ask about riders and something call roll on or extension after the term.
Adding riders to my list of questions for the agent. I'm guessing that is more for people with special health conditions. I was planning on asking about renewability too. I think I'm just going to try and be a little conservative upfront so that the term is long enough that I won't need to extend. Thank you for your help.

Mm8719
Posts: 12
Joined: Sat Jan 12, 2019 1:21 pm

Re: Life insurance

Post by Mm8719 » Thu Mar 14, 2019 9:06 pm

Check out Amica Insurance. I got an additional term policy with them recently in preparation of having baby #2. They were not the cheapest, but they were very competitive for me. I also got quotes with State Farm, Guardian, and term4sale ran several quotes...Amica was the lowest of the top rated companies and was within 2 dollars a month of the cheapest, a couple of which I had never even heard of (and I'm in the industry so that's saying something. )

For a 20 year term $500k was $270 a year, $750k was $367 a year. If you don't have any medical issues they don't do blood work for $500 or less. I went with the $750k but it still was a quick an easy process. 10 minute phone interview and then a nurse came and got my blood work as well as made me pee in a cup. Oh and another thing I thought was interesting...I'm not a smoker but out of curiosity I asked how that affected rates...she said as long as it's been at least 5 years it has no impact. If you haven't smoked in 3 years the price went up slightly. If you haven't smoked in at least a year but less than 3, it goes up quite a bit. However, if you are a prior smoker and get one of those higher rates, she said you can call them back once you hit the next threshold, and they will lower your rate. For instance if you haven't smoked in 3 years, you will pay the slightly higher rate for 2 years, then call them back and they lower it to the better rate. Thought that was pretty nice for the smokers out there.

I also have my auto, home, and umbrella with Amica. In my state they can't give a discount on home and umbrella, but they discounted the auto by about $30 a year for adding the life policy. Once I factored that in, it was a no brainer.

EHEngineer
Posts: 793
Joined: Sat Feb 28, 2015 4:35 pm

Re: Life insurance

Post by EHEngineer » Thu Mar 14, 2019 9:19 pm

jaybee9 wrote:
Thu Mar 14, 2019 8:39 pm

Great point about going direct versus through an agent. So, if I have a list of several agents, how would you pick a good one? The only thing that was different between them all was one had a CLU designation. Which doesn't necessarily make him better although I suppose better trained? I also tried looking up some of the agent's companies on the local BBB with limited success. Not sure how else to vet agents.

Thanks.
I would just call the agents and discuss what you need. If they seem nice and immediately understand what you want, then they should quickly start guiding you on how to proceed. If they start selling cash value insurance, investments, or annuities, then hang up and move on. Call three agents, even if you like the first one. Don't waste their time; I suspect you could make a yes/no decision within 5 minutes of conversation.

Also, ask friends in your age range for recommendations.

One note: technically speaking you cannot buy life insurance without an agent. But if you call Amica or State Farm, the agent you speak with can only sell their company's insurance, they're a "captured agent." What BruDude suggested is an "independent agent" who can sell insurance from multiple companies. An independent agent can help you find the best insurer for your medical background.

good luck. you're on the right track.
Or, you can ... decline to let me, a stranger on the Internet, egg you on to an exercise in time-wasting, and you could say "I'm probably OK and I don't care about it that much." -Nisiprius

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 9:36 pm

Mm8719 wrote:
Thu Mar 14, 2019 9:06 pm
Check out Amica Insurance. I got an additional term policy with them recently in preparation of having baby #2. They were not the cheapest, but they were very competitive for me. I also got quotes with State Farm, Guardian, and term4sale ran several quotes...Amica was the lowest of the top rated companies and was within 2 dollars a month of the cheapest, a couple of which I had never even heard of (and I'm in the industry so that's saying something. )

I also have my auto, home, and umbrella with Amica. In my state they can't give a discount on home and umbrella, but they discounted the auto by about $30 a year for adding the life policy. Once I factored that in, it was a no brainer.
Hmm, Amica hasn't come up on term4sale. And yes I should check with my current insurer (State Farm) although I think I read their life insurance is more expensive.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 14, 2019 9:42 pm

EHEngineer wrote:
Thu Mar 14, 2019 9:19 pm
I would just call the agents and discuss what you need. If they seem nice and immediately understand what you want, then they should quickly start guiding you on how to proceed. If they start selling cash value insurance, investments, or annuities, then hang up and move on. Call three agents, even if you like the first one. Don't waste their time; I suspect you could make a yes/no decision within 5 minutes of conversation.

good luck. you're on the right track.
Yeah I will make some calls tomorrow. For sure any mention of whole life insurance will get them booted quick! Thanks.

Mm8719
Posts: 12
Joined: Sat Jan 12, 2019 1:21 pm

Re: Life insurance

Post by Mm8719 » Thu Mar 14, 2019 9:53 pm

jaybee9 wrote:
Thu Mar 14, 2019 9:36 pm
Mm8719 wrote:
Thu Mar 14, 2019 9:06 pm
Check out Amica Insurance. I got an additional term policy with them recently in preparation of having baby #2. They were not the cheapest, but they were very competitive for me. I also got quotes with State Farm, Guardian, and term4sale ran several quotes...Amica was the lowest of the top rated companies and was within 2 dollars a month of the cheapest, a couple of which I had never even heard of (and I'm in the industry so that's saying something. )

I also have my auto, home, and umbrella with Amica. In my state they can't give a discount on home and umbrella, but they discounted the auto by about $30 a year for adding the life policy. Once I factored that in, it was a no brainer.
Hmm, Amica hasn't come up on term4sale. And yes I should check with my current insurer (State Farm) although I think I read their life insurance is more expensive.
Correct. Neither Amica or SF will be on term4sale. You will have to go through your agent to get a quote for SF. Amica is a direct writer, meaning they don't have agents (and thus don't have to pay agents commissions) so you would get a quote on their website and they'll call you, or just call them first. You may want to get a quote from those two and then compare with the others that are on term4sale like I did. If those aren't competitive for you see what a good independent agent can find for you. Personally I would stay clear of just going with the cheapest option, though.

BruDude
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Location: Las Vegas

Re: Life insurance

Post by BruDude » Thu Mar 14, 2019 11:35 pm

Captive companies like Amica and State Farm are not going to have competitive rates with a history of sleep apnea. They are very conservative with their underwriting.

Valuethinker
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Re: Life insurance

Post by Valuethinker » Fri Mar 15, 2019 5:15 am

jaybee9 wrote:
Wed Mar 13, 2019 9:55 pm
I am in the process of trying to switch from life insurance through work to getting term life through term4sale.com. I have several questions:

- All else being equal, how do you pick between different quotes where the companies have the same rating but the premium differs by cents or a few dollars? Is it as simple as going with the lowest price or are there other considerations to weigh?

- Do insurers always require medical tests?

- Does formerly having a sleep apnea diagnosis (have since lost a lot of weight) automatically raise rates due to being dropped into a lower health class?

- Are there any life insurance agents that have fiduciary responsibility (e.g. CLU, etc.)?

- Are all the policies level premium on term4sale.com?

- Term policies can be cancelled at any time without penalty right?

- Any other gotchas to watch out for when going through this process?

Thanks for your help.
In terms of what you buy.

It may suit to buy for example a 20 year policy and a 30 year policy. Or 2 x 20 year policies. That way, you can lapse one in the future as your needs change (more investments => less need), but still have protection in place at a price agreed now, when you are young and healthy.

Mm8719
Posts: 12
Joined: Sat Jan 12, 2019 1:21 pm

Re: Life insurance

Post by Mm8719 » Fri Mar 15, 2019 8:53 am

BruDude wrote:
Thu Mar 14, 2019 11:35 pm
Captive companies like Amica and State Farm are not going to have competitive rates with a history of sleep apnea. They are very conservative with their underwriting.
Somehow I missed the OPs part about sleep apnea...You are probably correct. Although a lot of the questions were in the last 5 years have you...or in the last 10 years have you...so depending on how long ago, he might be ok. Id say still worth exploring. The more options the better IMO.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 10:33 am

Valuethinker wrote:
Fri Mar 15, 2019 5:15 am
In terms of what you buy.

It may suit to buy for example a 20 year policy and a 30 year policy. Or 2 x 20 year policies. That way, you can lapse one in the future as your needs change (more investments => less need), but still have protection in place at a price agreed now, when you are young and healthy.
Valuethinker, awesome suggestion. I have heard of laddering before but I hadn't quite understood the why and how to structure it until you mentioned about letting one lapse. I was thinking exactly that - it was unnecessary to have the same coverage all the way through 15 or 20 years especially because my assets will most likely be largest at the end.

So I went on term4sale and put in my specifics (location, age, health, etc) and created a data set comparing insurance amounts, premiums, and term lengths. I pulled the lowest quote for each combination of insurance amount and term length (I realize price isn't the only factor per previous comments). That's the really nice thing about term4sale. It would have been a lot more work and time to generate using other websites. I plotted the data below.

https://drive.google.com/file/d/1CTT6kD ... sp=sharing

There is a knee in the curves around $500 K. You get a better value at higher insurance amounts. If I bought 10 twenty year policies for $189 each ($1890 total), versus 1 twenty year policy for $1075.

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 10:35 am

Mm8719 wrote:
Fri Mar 15, 2019 8:53 am
BruDude wrote:
Thu Mar 14, 2019 11:35 pm
Captive companies like Amica and State Farm are not going to have competitive rates with a history of sleep apnea. They are very conservative with their underwriting.
Somehow I missed the OPs part about sleep apnea...You are probably correct. Although a lot of the questions were in the last 5 years have you...or in the last 10 years have you...so depending on how long ago, he might be ok. Id say still worth exploring. The more options the better IMO.
Unfortunately, the diagnosis was within the last 5 years. But it's easy enough for me to call SF since I already have an account with them.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 10:40 am

So as I go through the list of agents I got through putting in various ZIP codes in my area, I've been seeing agents come up that aren't actually local. Does that matter? I guess if all the work is done over the phone or Internet it doesn't matter I suppose.

gtg970g
Posts: 131
Joined: Tue Mar 27, 2012 11:52 am

Re: Life insurance

Post by gtg970g » Fri Mar 15, 2019 10:59 am

jaybee9 wrote:
Fri Mar 15, 2019 10:33 am

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?
Some insurance companies will waive the policy fee for a second policy on the same life if they are issued simultaneously so it could be cheaper to get two policies with the same carrier. An independent agent should know what carriers will waive the second policy fee and which ones won't.

aquaman
Posts: 97
Joined: Thu Jul 28, 2016 2:13 pm

Re: Life insurance

Post by aquaman » Fri Mar 15, 2019 11:16 am

Mm8719 wrote:
Thu Mar 14, 2019 9:53 pm
Correct. Neither Amica or SF will be on term4sale. You will have to go through your agent to get a quote for SF. Amica is a direct writer, meaning they don't have agents (and thus don't have to pay agents commissions) so you would get a quote on their website and they'll call you, or just call them first. You may want to get a quote from those two and then compare with the others that are on term4sale like I did.
Practically no one out there would qualify for the exact same health category from every insurance company out there, which means that you can't just compare rates. Company A may have cheaper rates for ultra preferred than Company B, but if you just blindly apply with Company A and get a "standard" offer, that up front rate comparison goes completely out the window, as you may've been able to get "standard plus" or "preferred" from Company B.

The problem with companies like Amica, State Farm and others, is that they are primarily property and casualty ("P&C") insurance carriers and do not have nearly as much expertise in the life insurance arena as the specialty life insurance companies. As a result, the P&C carriers tend to be extremely conservative, which causes a lot of their applicants not to qualify for the best health ratings that they could otherwise obtain at the specialty carriers. This makes the P&C life insurance offers rather expensive. Even when the health ratings end up being the same, the P&C quotes are nothing special. So, personally, I wouldn't waste my time with any of them.
Personally I would stay clear of just going with the cheapest option, though.
People shouldn't be arbitrarily picking life insurance companies. Instead, they should be working with good life insurance agents (this doesn't cost you a penny extra) that represent multiple companies and are familiar with their underwriting requirements. This way, they can review your health situation up front, if necessary informally shop you among different companies, and then recommend the carrier that is going to be optimal for you. If the carrier then still comes out with an inferior offer, the agent would be able to quickly switch the application to a different carrier.
Mm8719 wrote:
Thu Mar 14, 2019 9:06 pm
Amica was the lowest of the top rated companies and was within 2 dollars a month of the cheapest, a couple of which I had never even heard of (and I'm in the industry so that's saying something.
You shouldn't be comparing or picking monthly payments, which are more expensive than annual payments.
jaybee9 wrote:
Thu Mar 14, 2019 8:19 pm
The thing I like most about term4sale.com is that they give me a list of 3 agents and the option to contact them or be contacted.
term4sale is just an aggregator engine that shows you different rates offered by various insurance companies. As I mentioned above, this doesn't tell you how much you'll actually end up paying, as you don't know their underwriting requirements and cannot, therefore, easily tell what health rating you'll receive.

Insurance agents pay to be listed on term4sale. So, the fact that certain agents show up there isn't any different from randomly googling for one.
Last edited by aquaman on Fri Mar 15, 2019 11:18 am, edited 2 times in total.

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Stinky
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Re: Life insurance

Post by Stinky » Fri Mar 15, 2019 11:17 am

jaybee9 wrote:
Fri Mar 15, 2019 10:40 am
So as I go through the list of agents I got through putting in various ZIP codes in my area, I've been seeing agents come up that aren't actually local. Does that matter? I guess if all the work is done over the phone or Internet it doesn't matter I suppose.
Correct, it doesn’t matter so long as they’re licensed to sell in your state.

In addition to recommendations from term4sale, you could also consider Zander or Select Quote. They sell on a nationwide basis, and offer basically all companies that are offered by any independent agent.
It's a GREAT day to be alive - Travis Tritt

aquaman
Posts: 97
Joined: Thu Jul 28, 2016 2:13 pm

Re: Life insurance

Post by aquaman » Fri Mar 15, 2019 11:41 am

jaybee9 wrote:
Fri Mar 15, 2019 10:33 am
So I went on term4sale and put in my specifics (location, age, health, etc) and created a data set comparing insurance amounts, premiums, and term lengths. I pulled the lowest quote for each combination of insurance amount and term length (I realize price isn't the only factor per previous comments). That's the really nice thing about term4sale. It would have been a lot more work and time to generate using other websites. I plotted the data below.

https://drive.google.com/file/d/1CTT6kD ... sp=sharing

There is a knee in the curves around $500 K. You get a better value at higher insurance amounts. If I bought 10 twenty year policies for $189 each ($1890 total), versus 1 twenty year policy for $1075.

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?
It's a fine graph that you've put together, but, for the reasons above, is of no practical applicability. I think that term4sale is a useful website, but most people aren't using it the right way. The rates displayed there don't tell you anything useful until and unless you figure out what health ratings you'll qualify for with various companies.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 11:42 am

aquaman wrote:
Fri Mar 15, 2019 11:16 am
The problem with companies like Amica, State Farm and others, is that they are primarily property and casualty ("P&C") insurance carriers and do not have nearly as much expertise in the life insurance arena as the specialty life insurance companies. As a result, the P&C carriers tend to be extremely conservative, which causes a lot of their applicants not to qualify for the best health ratings that they could otherwise obtain at the specialty carriers. This makes the P&C life insurance offers rather expensive. Even when the health ratings end up being the same, the P&C quotes are nothing special. So, personally, I wouldn't waste my time with any of them.
jaybee9 wrote:
Thu Mar 14, 2019 8:19 pm
The thing I like most about term4sale.com is that they give me a list of 3 agents and the option to contact them or be contacted.
term4sale is just an aggregator engine that shows you different rates offered by various insurance companies. As I mentioned above, this doesn't tell you how much you'll actually end up paying, as you don't know their underwriting requirements and cannot, therefore, easily tell what health rating you'll receive.

Insurance agents pay to be listed on term4sale. So, the fact that certain agents show up there isn't any different from randomly googling for one.
Thanks for explaining the differences in companies. I just talked to State Farm and you are correct they were like 2.5x - 3x the lowest prices I was seeing on term4sale.com :shock:

I suppose a random search would work too but term4sale is pretty quick way to find local people that are independent. I would probably prefer local, all things considered.

Valuethinker
Posts: 39044
Joined: Fri May 11, 2007 11:07 am

Re: Life insurance

Post by Valuethinker » Fri Mar 15, 2019 11:46 am

jaybee9 wrote:
Fri Mar 15, 2019 10:33 am
Valuethinker wrote:
Fri Mar 15, 2019 5:15 am
In terms of what you buy.

It may suit to buy for example a 20 year policy and a 30 year policy. Or 2 x 20 year policies. That way, you can lapse one in the future as your needs change (more investments => less need), but still have protection in place at a price agreed now, when you are young and healthy.
Valuethinker, awesome suggestion. I have heard of laddering before but I hadn't quite understood the why and how to structure it until you mentioned about letting one lapse. I was thinking exactly that - it was unnecessary to have the same coverage all the way through 15 or 20 years especially because my assets will most likely be largest at the end.

So I went on term4sale and put in my specifics (location, age, health, etc) and created a data set comparing insurance amounts, premiums, and term lengths. I pulled the lowest quote for each combination of insurance amount and term length (I realize price isn't the only factor per previous comments). That's the really nice thing about term4sale. It would have been a lot more work and time to generate using other websites. I plotted the data below.

https://drive.google.com/file/d/1CTT6kD ... sp=sharing

There is a knee in the curves around $500 K. You get a better value at higher insurance amounts. If I bought 10 twenty year policies for $189 each ($1890 total), versus 1 twenty year policy for $1075.

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?
Generally the bigger the policy with an insurer, the cheaper it is per unit of cover.

There is no rule of thumb per se, but splitting 50/50 is usually a good place to start. If you need 700k of cover, you buy 350k at 20 years and 350k at 25-30 years (or 500k 20 years and 250k 30 years). Or 2 policies of 350k.

The only exception re cost per cover is medical underwriting - once the policy reaches a certain size they require a full medical. But it's generally to your advantage to go with a company that knows the risk than to try to dodge that - if you are found not to have reported a risk they can disallow the policy retrospectively (I don't know in USA but there is usually a common database of applicants the insurers all use for medical risks - so you can't play them off against each other).

Unless you have very specific needs over the next 10 years -(i.e. not just kids getting older), you are over 40 or 45 say, you are in an expensive insurance category (e.g. to a long run debilitating illness) - I don't recommend 10 year policies.

It's too easy to get to the end of 10 years and find that your financial plans have not worked out (say due to illness) and you still have the insurable need, but it's much more expensive/ unaffordable to buy that insurance. The guaranteed level term premium is really important in this.

I think for many people 20 year policies work well (carrying a newborn child onto college) although I prefer something that gets you to 60 and the presumed end of your working career. So somewhere between 20 and 30 years depending on the age of the buyer.

You need a full accounting of insurable need, to. Rule of thumb is to put the survivors into the same financial position as they were before their loss. That's a big number for a professional in his or her 30s, depending upon spousal income, dependents etc. A surviving parent will need full time childcare (or at least afterschool care), probably want to have paid down or paid off the mortgage, etc.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 11:49 am

aquaman wrote:
Fri Mar 15, 2019 11:41 am
jaybee9 wrote:
Fri Mar 15, 2019 10:33 am
So I went on term4sale and put in my specifics (location, age, health, etc) and created a data set comparing insurance amounts, premiums, and term lengths. I pulled the lowest quote for each combination of insurance amount and term length (I realize price isn't the only factor per previous comments). That's the really nice thing about term4sale. It would have been a lot more work and time to generate using other websites. I plotted the data below.

https://drive.google.com/file/d/1CTT6kD ... sp=sharing

There is a knee in the curves around $500 K. You get a better value at higher insurance amounts. If I bought 10 twenty year policies for $189 each ($1890 total), versus 1 twenty year policy for $1075.

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?
It's a fine graph that you've put together, but, for the reasons above, is of no practical applicability. I think that term4sale is a useful website, but most people aren't using it the right way. The rates displayed there don't tell you anything useful until and unless you figure out what health ratings you'll qualify for with various companies.
Okay I get what you are saying. Although if I'm in very good health I would "in theory" qualify for the lowest rates shown. Got some more calls to make. Thank you.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 11:52 am

Perhaps also worth mentioning that State Farm didn't offer 15 year term insurance, which I am considering. So, more expensive, less options.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 12:03 pm

Valuethinker wrote:
Fri Mar 15, 2019 11:46 am
jaybee9 wrote:
Fri Mar 15, 2019 10:33 am
Valuethinker wrote:
Fri Mar 15, 2019 5:15 am
In terms of what you buy.

It may suit to buy for example a 20 year policy and a 30 year policy. Or 2 x 20 year policies. That way, you can lapse one in the future as your needs change (more investments => less need), but still have protection in place at a price agreed now, when you are young and healthy.
Valuethinker, awesome suggestion. I have heard of laddering before but I hadn't quite understood the why and how to structure it until you mentioned about letting one lapse. I was thinking exactly that - it was unnecessary to have the same coverage all the way through 15 or 20 years especially because my assets will most likely be largest at the end.

So I went on term4sale and put in my specifics (location, age, health, etc) and created a data set comparing insurance amounts, premiums, and term lengths. I pulled the lowest quote for each combination of insurance amount and term length (I realize price isn't the only factor per previous comments). That's the really nice thing about term4sale. It would have been a lot more work and time to generate using other websites. I plotted the data below.

https://drive.google.com/file/d/1CTT6kD ... sp=sharing

There is a knee in the curves around $500 K. You get a better value at higher insurance amounts. If I bought 10 twenty year policies for $189 each ($1890 total), versus 1 twenty year policy for $1075.

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?
Generally the bigger the policy with an insurer, the cheaper it is per unit of cover.

There is no rule of thumb per se, but splitting 50/50 is usually a good place to start. If you need 700k of cover, you buy 350k at 20 years and 350k at 25-30 years (or 500k 20 years and 250k 30 years). Or 2 policies of 350k.

The only exception re cost per cover is medical underwriting - once the policy reaches a certain size they require a full medical. But it's generally to your advantage to go with a company that knows the risk than to try to dodge that - if you are found not to have reported a risk they can disallow the policy retrospectively (I don't know in USA but there is usually a common database of applicants the insurers all use for medical risks - so you can't play them off against each other).

Unless you have very specific needs over the next 10 years -(i.e. not just kids getting older), you are over 40 or 45 say, you are in an expensive insurance category (e.g. to a long run debilitating illness) - I don't recommend 10 year policies.

It's too easy to get to the end of 10 years and find that your financial plans have not worked out (say due to illness) and you still have the insurable need, but it's much more expensive/ unaffordable to buy that insurance. The guaranteed level term premium is really important in this.

I think for many people 20 year policies work well (carrying a newborn child onto college) although I prefer something that gets you to 60 and the presumed end of your working career. So somewhere between 20 and 30 years depending on the age of the buyer.

You need a full accounting of insurable need, to. Rule of thumb is to put the survivors into the same financial position as they were before their loss. That's a big number for a professional in his or her 30s, depending upon spousal income, dependents etc. A surviving parent will need full time childcare (or at least afterschool care), probably want to have paid down or paid off the mortgage, etc.
Great advice, love this forum! It's interesting to hear the different perspectives people have. I think I'm narrowing in on the insurance term, 15 - 20 years, 2 policies. I am trying to retire early and in any case my financial situation is strengthening rapidly due to a lot of changes over the past year so I like being able to jettison one policy if things are continuing to go well. I definitely feel more prepared to talk to the agents.

aquaman
Posts: 97
Joined: Thu Jul 28, 2016 2:13 pm

Re: Life insurance

Post by aquaman » Fri Mar 15, 2019 12:14 pm

jaybee9 wrote:
Fri Mar 15, 2019 11:42 am
Thanks for explaining the differences in companies. I just talked to State Farm and you are correct they were like 2.5x - 3x the lowest prices I was seeing on term4sale.com :shock:
I would stop trying to compare rates and start looking for a good independent agent. At this point, comparing rates is just a waste of time.
I suppose a random search would work too but term4sale is pretty quick way to find local people that are independent. I would probably prefer local, all things considered.
That's fine, but you're probably never going to meet your agent in person, so geographic location really doesn't matter.
Okay I get what you are saying. Although if I'm in very good health I would "in theory" qualify for the lowest rates shown.
When it comes time to assess your health, different insurance companies have different underwriting guidelines, as well as very different tolerance for the way that they look at certain health issues. So, the term "very good health" means nothing to them, as they're trying to use your information to calculate your anticipated mortality. So, for instance, certain types of moving violations can cause life insurance issues.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 15, 2019 12:20 pm

aquaman wrote:
Fri Mar 15, 2019 12:14 pm
jaybee9 wrote:
Fri Mar 15, 2019 11:42 am
Thanks for explaining the differences in companies. I just talked to State Farm and you are correct they were like 2.5x - 3x the lowest prices I was seeing on term4sale.com :shock:
I would stop trying to compare rates and start looking for a good independent agent. At this point, comparing rates is just a waste of time.
Yep roger that. To that end, I kind of referred to this in my first post but is there any meaningful advantage to using an agent that has a CLU (or other?) certification? I guess it would seem to be helpful and the cost would be no different.

BruDude
Posts: 3073
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Life insurance

Post by BruDude » Fri Mar 15, 2019 1:22 pm

jaybee9 wrote:
Fri Mar 15, 2019 11:49 am
aquaman wrote:
Fri Mar 15, 2019 11:41 am
jaybee9 wrote:
Fri Mar 15, 2019 10:33 am
So I went on term4sale and put in my specifics (location, age, health, etc) and created a data set comparing insurance amounts, premiums, and term lengths. I pulled the lowest quote for each combination of insurance amount and term length (I realize price isn't the only factor per previous comments). That's the really nice thing about term4sale. It would have been a lot more work and time to generate using other websites. I plotted the data below.

https://drive.google.com/file/d/1CTT6kD ... sp=sharing

There is a knee in the curves around $500 K. You get a better value at higher insurance amounts. If I bought 10 twenty year policies for $189 each ($1890 total), versus 1 twenty year policy for $1075.

It seems like there are a number of advantages to the laddering: less underwriting headaches since the insurance amount is less and would even allow to use two different companies if desired. Any rules of thumb for setting up a policy ladder?
It's a fine graph that you've put together, but, for the reasons above, is of no practical applicability. I think that term4sale is a useful website, but most people aren't using it the right way. The rates displayed there don't tell you anything useful until and unless you figure out what health ratings you'll qualify for with various companies.
Okay I get what you are saying. Although if I'm in very good health I would "in theory" qualify for the lowest rates shown. Got some more calls to make. Thank you.
If you have been diagnosed with sleep apnea, you are not "in very good health" according to the insurance company. Mild sleep apnea with full compliance of recommended treatment and CPAP use can still get Preferred Plus rates with a few companies, but if you aren't using a CPAP machine you are going to be anywhere from Preferred all the way down to a Table 4 rating with some companies.

My advice - do NOT apply with a "captive" company like State Farm or Amica, I guarantee you will not get as good of a rate as you will using an independent agent that knows what they are doing.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Sat Mar 16, 2019 2:21 pm

I thought I would report back with some updates. I talked to several different independent insurance companies yesterday. For me it's a little hard to know whether someone is a "good" agent just from talking to them for 5-10 minutes on the phone. That said, speaking to them helped me to understand who would be helping me through the process and how they operate in general. Some other things that were helpful was checking reviews on yelp, Google reviews, and checking BBB.

I think key factors that helped me pick the final company were 1) Local business (could be helpful), 2) company was focused specifically on just selling life insurance (as opposed to auto, home, etc.), 3) had been in business a while, and 4) willing to endure a fair number of questions on the phone :D .

[Edit]
One thing that seemed apparent to me from talking to agents is that a lot of people aren't too well educated about life insurance. I got complimented because of the questions I was asking. I think being well prepared before calling them helped keep me from possibly getting steered into products or things I don't need.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Sat Mar 16, 2019 2:42 pm

BruDude wrote:
Fri Mar 15, 2019 1:22 pm

If you have been diagnosed with sleep apnea, you are not "in very good health" according to the insurance company. Mild sleep apnea with full compliance of recommended treatment and CPAP use can still get Preferred Plus rates with a few companies, but if you aren't using a CPAP machine you are going to be anywhere from Preferred all the way down to a Table 4 rating with some companies.

My advice - do NOT apply with a "captive" company like State Farm or Amica, I guarantee you will not get as good of a rate as you will using an independent agent that knows what they are doing.
Yes my discussions have borne these points out. According to the agent I am working with, the bar is pretty high for Preferred Plus in general so that was a bit of a bummer to hear. I may need to undergo additional testing to establish that it isn't an issue anymore due to the weight loss. As I mentioned earlier, State Farm was about 3x more expensive so definitely not going with them. Plus, they didn't even offer any reductions due to having multiple policies with them for auto, home, etc.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Thu Mar 21, 2019 8:46 pm

Amongst the quotes I got from the agent I am working with is a policy from Banner called OPTerm 20 (20 year term). It has two built-in riders (10 year and 15 year). The agent suggested it because I mentioned I was wanting to ladder policies. Anyone have any experience with this policy? I saw a comment on whitecoatinvester.com:

"Look at laddering coverage. Banner only charges a single policy fee where other companies would charge two so they might be the lowest cost."

I assume the policy fee he is referring to is built-in. When I build my own ladder from quotes on term4sale.com the Banner laddered policy looks to be a little more expensive. My thought is its probably best to stay with plain vanilla term policies. Thoughts?

BruDude
Posts: 3073
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Life insurance

Post by BruDude » Thu Mar 21, 2019 8:59 pm

jaybee9 wrote:
Thu Mar 21, 2019 8:46 pm
Amongst the quotes I got from the agent I am working with is a policy from Banner called OPTerm 20 (20 year term). It has two built-in riders (10 year and 15 year). The agent suggested it because I mentioned I was wanting to ladder policies. Anyone have any experience with this policy? I saw a comment on whitecoatinvester.com:

"Look at laddering coverage. Banner only charges a single policy fee where other companies would charge two so they might be the lowest cost."

I assume the policy fee he is referring to is built-in. When I build my own ladder from quotes on term4sale.com the Banner laddered policy looks to be a little more expensive. My thought is its probably best to stay with plain vanilla term policies. Thoughts?
Banner OPTerm is a plain vanilla term policy. The riders are just additional term policies packaged together instead of as separate policies. That way you only get charged one policy fee instead of three policy fees. The policy fee is usually $50-150 per policy depending on the insurance company. Sometimes the Banner ladder is cheaper, sometimes buying separate policies is cheaper, it just depends on your demographics and the health rating. Banner is the only company I know of that offers this structure.

Keep in mind that if you apply with two or three different companies, there is a possibility that you may get two or three different ratings and prices, especially considering the sleep apnea you mentioned earlier. I'd stick with one company if I were you.

Just so you're aware, the best rating Banner offers with sleep apnea is standard plus. Prudential, North American, American General, and Lincoln National can do Preferred Plus or Preferred, but it depends on the diagnosis of mild/moderate/severe, your compliance with recommended treatment, how long you've been doing it, etc.

My advice - don't worry about the quotes, they are meaningless until you get an approval. If Banner approves you at Standard Plus but American General would have given you Preferred or Preferred Plus, would you rather have the company that gave you the cheaper quote up front or the company that gave you the cheaper policy after the underwriting was completed? A good independent agent will be able to get you the best offer, which is the most important thing.

Topic Author
jaybee9
Posts: 68
Joined: Tue Mar 06, 2018 9:36 pm

Re: Life insurance

Post by jaybee9 » Fri Mar 22, 2019 7:45 pm

Thanks for the additional information BruDude. I will be applying soon after I finish my estimate of how my insurance I need.

Malinois000
Posts: 151
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Re: Life insurance

Post by Malinois000 » Fri Mar 22, 2019 7:49 pm

I'm a long time State Farm insured and they handle my life, auto, home, PAP, PLUP....you name it, my State Farm agent handles it. I have both term and universal life policies.

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Nate79
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Re: Life insurance

Post by Nate79 » Fri Mar 22, 2019 8:34 pm

Malinois000 wrote:
Fri Mar 22, 2019 7:49 pm
I'm a long time State Farm insured and they handle my life, auto, home, PAP, PLUP....you name it, my State Farm agent handles it. I have both term and universal life policies.
I guess the first step in realizing you got ripped off by Snake Farm is to state it out loud. Nothing like a
some horrible universal life insurance to enrich the salesman (the opposite of fiduciary) and some expensive term insurance.

Malinois000
Posts: 151
Joined: Sun Feb 26, 2017 6:08 pm

Re: Life insurance

Post by Malinois000 » Fri Mar 22, 2019 8:58 pm

Nate79 wrote:
Fri Mar 22, 2019 8:34 pm
Malinois000 wrote:
Fri Mar 22, 2019 7:49 pm
I'm a long time State Farm insured and they handle my life, auto, home, PAP, PLUP....you name it, my State Farm agent handles it. I have both term and universal life policies.
I guess the first step in realizing you got ripped off by Snake Farm is to state it out loud. Nothing like a
some horrible universal life insurance to enrich the salesman (the opposite of fiduciary) and some expensive term insurance.
There is a place for universal and term in my view; however, it you see it differently, that's fine.

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Stinky
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Location: Sweet Home Alabama

Re: Life insurance

Post by Stinky » Fri Mar 22, 2019 9:10 pm

Malinois000 wrote:
Fri Mar 22, 2019 8:58 pm
Nate79 wrote:
Fri Mar 22, 2019 8:34 pm
Malinois000 wrote:
Fri Mar 22, 2019 7:49 pm
I'm a long time State Farm insured and they handle my life, auto, home, PAP, PLUP....you name it, my State Farm agent handles it. I have both term and universal life policies.
I guess the first step in realizing you got ripped off by Snake Farm is to state it out loud. Nothing like a
some horrible universal life insurance to enrich the salesman (the opposite of fiduciary) and some expensive term insurance.
There is a place for universal and term in my view; however, it you see it differently, that's fine.
There is certainly a place for term insurance. Some folks might find a place for universal life.

But, in general, State Farm's prices for life insurance are very high. There are many reputable companies that sell life insurance cheaper than State Farm.
It's a GREAT day to be alive - Travis Tritt

BruDude
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Location: Las Vegas

Re: Life insurance

Post by BruDude » Fri Mar 22, 2019 11:59 pm

State Farm is one of the worst companies to buy life insurance from for a number of reasons. Good company, bad life insurance products and underwriting.

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