Joe Capone, ChFC, LUTCF
[Editor's Note: This is a guest post from Joe Capone, ChFC, LUTCF, a long-time blog sponsor and the guy behind InsuringIncome.Com. Although this isn't a paid post, he does pay me money every month to advertise on this website. This is an important post because it points out how term life insurance is essentially a commodity like gasoline, and should be bought mostly based on price. Enjoy!]
When purchasing a product or service, we commonly wonder why one product costs more than the next. In some cases, something that costs more means that the product is a higher quality or it means that it has more features. This is not always the case though, especially when it comes to purchasing term life insurance. The marketplace is very competitive so it definitely pays to shop around before securing a new term life insurance policy. There are many carriers that make for good options for securing this critical insurance. Just because you are not familiar with a company does not mean that it should be ruled out. Take some time to learn about the various carriers that offer life insurance. Use an instant term life insurance quoting tool to see which policies have the lowest cost, based on the specific policy type and face amount that you are looking for.
Why Pay More for Name Brand?
While most everyone has heard of the larger life insurance carriers, there are some smaller insurance companies that have been in the industry for just as long – and in some cases, even longer – that provide strong, stable coverage. In some cases, these carriers offer very competitive rates.
Depending on your age, state of residence, gender, length or type of coverage, health rating, and other underwriting criteria, one could see different companies climb to the top of the quote list for each scenario. Specific medical events are handled more favorably by some companies than by other companies so it is important to know your options. If you are approved for a Preferred rating (second rating class for some carriers), one has to ask “Would any other carrier consider approving me at a Preferred Plus rating (top rating class for many carriers)?”
Life Insurance Companies Competing for your Business
Many insurers have methods to be competitive when other insurers are not willing to budge on an approved health rating. The fact that one carrier approves an application at a higher health class can result in substantial premium savings. For instance, Banner has a “crediting program “ that can help to improve an underwriting decision by one class if the one adverse finding was for build, blood pressure, family history, or cholesterol/HDL ratio and 3 of 7 other specific criteria are met. This can only be used on cases rated Standard or better.
A brochure that was put out by Banner Life states that 1 in 10 of their policies that were issued in 2012 were improved by using the company's crediting program.
Someone that is in the market for life insurance wants to know that the issuing company has the financial stability to be there when a claim needs to be paid. Since there are many life insurance companies, it can be difficult to be familiar with every company. It is not uncommon for someone to bypass companies simply because they have never heard of the company. An individual may elect to purchase coverage from a carrier that has a higher premium (while also potentially having fewer policy features) simply because they recognize the company from a TV commercial, a family member worked at the company in the past, they recognize the name from the benefits flyer from their employer, etc, etc. Making a well informed decision can have a significant impact on the long term financial well being of a family.
In this post I will profile some of the most competitive life insurance companies in today’s marketplace; all profiled companies are A rated or better by A.M. Best.
Banner Life (William Penn Life Insurance Company in New York)
The company is rated A+ (Superior) by A.M. Best and AA- (Very Strong) by Standard and Poor's. Banner is owned by Legal and General America, one of the largest insurance companies in the world that has been in business for more than 175 years. Banner Life offers customers the option to purchase a 10 year, 20 year, or 30 year level term life policy.
A unique feature of Banner Life policies is that they have a “Laddered Term Life Insurance” rider. Typically, someone that wants to have $3,000,000 of term coverage for the next 10 years, followed by $2,000,000 for the next 10 years, and $1,000,000 for the final 10 years would need to purchase three separate policies. Each policy would have its own policy fee. Banner can issue the same level of coverage in one policy by using riders to attach the other term periods. This is done with a single policy fee. The savings that are obtained from not having multiple policy fees can make this the least expensive option.
Banner also has a crediting program (mentioned above) that can help to improve the rating class of the insured by one health class. The combination of low rates, the laddered rider, an A+ rating from A.M. Best, and their underwriting crediting program makes Banner a company that is worth considering.
SBLI – The Savings Bank Life Insurance Company of Massachusetts
Likewise, SBLI (The Savings Bank Life Insurance Company of Massachusetts), another lesser-known insurer, is also a highly rated insurer, with an A+ (Superior) rating from A.M. Best. SBLI does not offer coverage in New York or Connecticut. Centrian Life is the carrier that offers coverage in Connecticut. SBLI has been in business for more than 100 years. SBLI offers the traditional 10 year, 20 year, and 30 year level term life policies. They also have a 25 year term life policy which most companies do not offer as an option. SBLI also offers a 15% discount on the first year premium for 20, 25, and 30 year level term policies for AAA members in MA, CT, RI, and NH.
Genworth
Genworth has been in the insurance arena for a very long time. Since they opened their doors for business, this insurer has been distributing insurance and financial products through banks, independent brokerages, and other financial institutions, and has a presence in more than 25 countries. Genworth has an A (Excellent) rating from A.M. Best, an A- (Strong) from Standard & Poor's, and an A3 (Good) from Moody's.
Prudential (Pruco)
Prudential has been in the business of insurance and financial services for over 125 years, helping its customers to both build and protect wealth – primarily through its protection products. The company has an A+ rating from A.M. Best, a AA- from Standard & Poor's, an A1 rating from Moody's, and an A+ rating from Fitch Ratings. Prudential offers a 10 year, 15 year, 20 year, and 30 year level term life policy.
Ohio National
Ohio National Financial Services was founded in 1909 as a mutual insurer. The company has earned very high rankings for financial security and claims paying ability, including an AA- from Standard & Poor's, an A1 from Moody's, and an A+ (Superior) from A.M. Best.
Ohio National offers a 10, 15, and 20 year level term product. They do not offer a 30 year level term product. Their lowest cost term product (“Basic”) does not allow for conversion and can be a great fit for someone that knows that they have a temporary need for life insurance. Ohio National’s other term product, “Plus”, allows for conversion to permanent insurance without further medical underwriting. It is slightly more expensive than the “Basic” product and is also offered at a competitive price.
American General
American General has been in the business for more than 150 years. The company has earned very high ratings from the insurance company rating agencies, including an A+ (Strong) from Standard & Poor's, an A2 (Good) from Moody's Investors Service, an A+ (Strong) from Firth Ratings, and an A (Excellent) from A.M. Best Company.
American General’s unique offering is their Select-a-Term® product. The Select-a-Term® product is available in 17 versions There is a 10 year level policy and then there are options ranging from 15 years up to 30 years of level term life coverage. This product can be great to meet the specific needs of buying life insurance to cover the remaining mortgage payments, for college planning, and other goals that have a defined time horizon.
Pacific Life
Pacific Life was founded over 100 years ago as a holding company owned by its policy and contract holders. Today, this mutual insurer prefers to make decisions without having to consider the effect on stock price. It is highly rated: an A+ (Superior) from A.M. Best, an A+ (Strong) from Fitch, and A1 (Good) from Moody's, and an A+ (Strong) from Standard & Poor's.
Pacific Life offers an annually renewable term life policy (Pacific Art), a 10 year level term, and a 20 year level term policy. They do not offer a 30 year level term policy.
Finding the Right Life Insurance Coverage for Less
The Internet has made comparison shopping for life insurance much easier today than ever before. A few simple clicks can provide you with a great deal of information about an insurer's product, its premium price, and all of the other features and riders it has to offer – right from the comfort of your own home. In doing so, you can quickly and easily determine which coverage and carrier best meet your specific needs.
Don't know how much coverage you need? That's easy to determine today, too. Simply click on one of the many online life insurance needs calculators that are available on the Internet today. These needs calculators can walk you through the steps that are necessary in deciphering the amount of life insurance coverage your survivors would require for paying off debt, for income replacement, or for other potential monetary obligations.
[Editor's Note: Joe's site has a handy function where you can get instant term life insurance policy quotes without having to provide personal information. Have you bought term life from one of these lesser known companies? What did you think? Comment below!]
How easy is it to shop around once you have a medical condition? For example, something like known asymptomatic bicuspic aortic valve?
If you look at WCI’s “Websites” links, one of them is for Term4life.com….
It is quite easy to shop around some with that website, but eventually they will put you through to an actual agent to help you. The website is good although not perfectly accurate to get an idea when “shopping”.
About 2 years ago, I worked with an agent who was motivated and he helped me get a good “preferred” policy (incidentally through Banner life) despite being a 35 y/o male with a history of cancer in myself….So bicuspid aortic valve shouldn’t be too much of a problem.
Good luck!
[Comment deleted at Mr. Capone’s request.]
Bicuspid Aortic Valve will typically result in a Standard Plus Non-Tobacco offer from a company like Banner Life.
We were looking to add $500K to my husband’s policy from NML, and asked them to quote a price. We then shopped around and found a similar plan through Banner – but at $30 less per month! That is a considerable savings.
Another thing to keep in mind with Pruco is that they use actual age to determine premium rates while most other carriers use age “nearest” birthday (round up your age when you pass your “half birthday”). As a result, they are typically ver competitive good compared to some other carriers – especially for 30-Year Level Premium Term.
[Comment deleted at Mr. Capone’s request.]
Wow… Thats a lot. I’m thankful my health is good and that I bought my policy at 32.
[Comment deleted at Mr. Capone’s request.]
It is also better to provide your agent with copies of any medical records that you have, including any clinical notes and diagnostic testing that was done.
As you can imagine, some of the details may differ between what the proposed insured states (even if you are a physician) and what the medical records document.
The agent can then send those records to various carriers along with a HIPPA compliant authorization to have them reviewed by an underwriter. This is a much safer way to go compared to a “Quick Quote” done via a phone call or an email.
[Comment deleted at Mr. Capone’s request.]
I have two questions. In order to reduce the premium/benefit of a policy, does it need to undergo underwriting? Increasing benefit would need underwriting, correct?
Second (or third), I was told that almost all carriers have an ability to have the Banner-style ladder, that it was not unique to banner. If this is not true, is the equivalent at another company just having two policies (one ten, one 20)?
You are correct. If you want to decrease the face amount of the policy, there is no medical underwriting required (only a change form application).
While you can layer policies within the same company, Banner allows you to do this with a term rider on the base policy. As such, you do not have to pay an additional policy fee as you would with other carriers where separate policies would need to be issued.
[Comment deleted at Mr. Capone’s request.]
Thoughts on Northwestern Mutual?
Northwestern Mutual can make sense if your goal is to convert from term to Whole Life. The same is true for MassMutual, Guardian, New York Life, Ohio National and other Mutual Insurance Companies (or Mutual Holding Companies).
NML offers Yearly Renewable Term (YRT) that will get very exensive over time. They also offer 20-Year Level Premium Term but they do not offer a 30-Year Level Premium Term policy.
If you know that you don’t ultimately want Whole Life, it will most likely make the most sense to look at the carriers outlined in this post.
I’m not an agent but from what I’ve seen only look at NWL if you are a smoker. They also seem to be very pushy to get you to buy permanent insurance.
[Comment deleted at Mr. Capone’s request.]
any opinion on Cincinnati financial? my agent thinks they offer best 20-30 year term in mn.
If I were to be worried about one of the companies above, it would be genworth bc they have so much of the ltci business but that’s just me.
As a resident, bought Term Life Insurance $2mil/20 years for like $700/yr from Banner Life. Will probably by another overlapping policy by the end of resident to have a period of $4mil in coverage.
I have two term policies from Ohio National. Each time I purchased them I had searched for rates on the various sites and the policies were listed as the least expensive. I haven’t had to use them (obviously), but it is nice to see this company is discussed favorably here. My policies are convertible but I doubt that I will. I did buy them through a broker. There was no difference in the price vs the online sites.
Just took my physical for life insurance through banner yesterday. Banner was the cheapest and they are very well rated. I actually got a different quote from two different insurance agents even though the policy was the same 20 yr 1 million. Not sure how that works? The one quote (from the guy we went through to get disability) was $150 more per year! As a kicker he tried to sell me an annuity instead of term. I used the search engine listed in the life insurance post in the archives to get the best rate. In the end I wasn’t sure how much to get. It’s a tough thing to project but I felt a million should about cover future house and future kids.
Weird that the same policy was a different price.
It’s possible that the two quote were at different health classes. I suspect that you would have seen that so that is definitely odd. The fact that the guy tried to sell you an annuity is surprising…rather, thought it would have been whole life that you would mention instead. The problem with term4sale is that you need an agent and you just never know who you will get matched with. InsuringIncome.com – we only quote term and won’t try to pull a switch. There’s nothing wrong with building a business on selling term and quality DI (and focusing on finding discounts for clients). There’s nothing wrong with buying term and quality DI (with discounts). In the end, it’s your insurance so make sure you are comfortable with the amount, carrier choice, riders, price, etc. Look at the name of the insurance company that is on the back of the agent’s business card. Sniff out biases and talk about them.
To clarify: if you ask for term, we sell you term. There’s also an instant universal life tool at our site.
http://www.term4sale.com is simply a tool to comparison shop or to double check that what an agent presented to you is among the lowest cost insurers. While the website does provide the names of up to three agents, personal information about the potential client is never provided.
Physicians should get referrals from their friends and/or colleagues or seek out those agents that have a great reputation in terms of client service and knowledge. However, they should still do their own research to make sure that what they have been told is accurate regarding their specific situation.
I review both disability insurance and life insurance illustrations for all day long. Typically, with disability insurance, I find wrong occupation classes quoted along with unnecessary riders and lack of discounts or policies that simply don’t make any sense at all.
For term life insurance, I find underwriting classes being shown that the client would never qualify for based on their height, weight, family history or personal medical history.
Do the financial ratings really matter that much? Do nwm’s super high ranking and assets under management make it “better” than Banner?
I personally don’t think they matter all that much. If an insurance company goes out of business, a few hundred thousand is backed by the state guaranty association. When companies go out of business, other firms usually buy up their policies, so you still have the same terms, just a new company backing the policy. Even if that doesn’t happen, you can usually still buy a new policy for a reasonable price. Obviously if you now have an illness or took up skydiving, you might have a problem. But if you had a 30 year policy, and the company went broke after 20 years, your replacement policy is a 10 year term, not a 30 year term. And that’s not too expensive, even at 45-55.
So, I think it’s important that the company be “good enough”, but I’m not willing to pay more for “super-good.”
Has anyone used the agents from Selectquote? My local MetLife guy swears up and down he has the best deal and another group I asked who are independent didn’t give me a great deal either compared to what the online guys are saying.
Selectquote does not really do anything different than what an experienced independent agent does.
Your age, height, weight, family history and personal history all play a role in what will work best in terms of premium rates.
http://www.term4sale.com makes it very easy to see which companies have the lowest premium rates for the coverage amount and guarantee period that you want. Once you know which company or companies will allow you to qualify for the best class, you can make your decision.
So, speak with agents, hear their arguments for the pros and cons of which company or companies they are recommending and why and then double check to make sure you are getting what you want relative to the rest of the marketplace.