How to Save on Life Insurance Premiums

83% of Life Insurance buyers say they did not purchase as much life insurance as they would have liked because it’s too expensive. However, these consumers believe that insurance costs nearly three times as much as the actual price.  Why is that?

Lock in and Save on Life Insurance

Life insurance prices can vary widely across the marketplace for the same exact type of policy and amount of coverage for the same person.  In particular for Final Expense or Whole Life, sometimes known as Burial Plans or Funeral Insurance, the monthly premiums can be up to 67% more per month between companies for the same exact benefits! Imagine the cost savings as the years go by!

Why are many Seniors Paying More for the Same Coverage?

So why do some people pay more?  Some purchased their policy through the mail. We all get mail solicitations but one thing you don’t want to purchase from a mail solicitation is life insurance! Policies taken out by mail solicitation are often misleading. Colonial Penn, Gerber, United of Omaha to name a few. These policies are issued on a guaranteed issue basis, meaning the insured has a waiting period of 2-3 years before the full benefit amount is available to your beneficiary.

Certainly, Guaranteed Issue policies have their place. These types of policies are intended for those that cannot get insurance anywhere else due to a chronic condition or recent serious health issue. Unless you are being treated for cancers, dementia or major heart conditions within the last 12 months, better coverage options are available. Next day coverage policies exist for those with chronic conditions such as COPD, Diabetes, Parkinson’s, obesity and more. You either have to look at the correct carriers or use a broker that understands the market with access to those sorts of carriers. A good agent will take the guesswork out of the equation and work for you, it’s a service that costs you nothing. If anything it pays you, and that’s the way it should be looked at.

Get Next Day Coverage, Not a 2 Year Waiting Period

When we do a review for a client and inform them that there are more cost effective options out there, most are surprised. It could be an expensive policy or one that carries a 2 year waiting period like Colonial Penn. A 2 year waiting period basically means you are insured for the amount of premium you have paid so far. For example, if your cost is $50/month and you have had your policy for 1 year, the death benefit is $50 x 12(months) + 10% interest so $660 total benefit after 1 year. The full face value does not kick in until month 25.  Use the button below to get your policy reviewed by a local professional.  

Life Insurance Companies to Avoid

One carrier to have on your radar is Primerica and their philosophy of buying term insurance and investing the difference. We have seen this many times, where people pay into Primerica for years then are suddenly shocked when they get the letter that their premiums are about to increase dramatically. For many they are in their 70’s and are just now finding out what “buy term and invest the difference” really means.

Hopefully you made some of those high yield investments with the savings from their term insurance because you will certainly need it now to help absorb the increasing term prices. Unfortunately many don’t know this when they get started but will find out many years later when they need Whole Insurance.

Other companies like Lincoln Heritage, will generate business from TV advertisements. These policies, generally speaking, are charging a substantial premium for that coverage. Not only are they paying for television commercials but extensive marketing like the “Funeral Advantage” and that cost gets passed on to you in the form of higher premiums!

Another shapeshifter is the well known AARP behemoth. Formerly known as American Association of Retired Persons – AARP co-brands with NY Life for life insurance marketing purposes. While many seniors feel comfortable with the AARP brand, they are not the insurer so this is misleading and taxing to the policy owner. According to a congressional report Titled: BEHIND THE VEIL: The AARP America Doesn’t Know, AARP charges nearly 5% surcharge to your premiums per month. In addition to selling increasing term coverage. Many don’t realize it’s an increasing and expiring term until the costs are rising as you age. It can also be problematic If you develop a condition or have a serious illness while covered under term. It can be harder to get whole life coverage later. It’s only after they absorb the increases for some time that they turn to a whole life (permanent) policy when they should have purchased that years earlier at much cheaper rates.

How the 2 year Contestability Period Works

If you are not aware, life insurance is regulated at the state level and has a contestability of 2 years, this is to deter fraud. What many are not aware of is that all carriers will use this and contest any claims made within the first 2 years. It doesn’t matter if you have Lincoln Heritage and their “Funeral Advantage” or Uncle Ralphie’s “We Pay Next Day Policy” Life Insurance as your carrier. If you are within that 2 year contestability period the insurance company will do its investigation, that’s just the way it works. So don’t fall victim to the chatter of the “pay within 24 hrs” or “take this to any funeral home in the country” because if the claim is made within the first 24 months, it will be delayed until the investigation inquiry is complete. All the carriers do this, they are not in the Insurance business to lose money. If you are outside of 2 year contestability then you are in the driver’s seat and your claim should be paid quickly.

Whole life/Permanent life insurance  is guaranteed to provide coverage for the rest of the insured’s life, as long as the policy premiums are paid. All premiums are fixed at the same price for the life of the policy It also develops a cash value element as time goes on.

Case Study

Here is a sample rate from Lincoln Heritage using TV and Print solicitations and the cheapest in the marketplace. Notice the differences for the same coverage. Calculate the amount of extra money being paid as time goes by. You could be missing out on a significant yearly savings by working with a broker.

For a 65 yr old non tobacco,  Male

For a 65 yr old non tobacco,  Female

When it comes to Life Insurance, working with a knowledgeable broker will always be the best way to discover your most cost effective coverage options.  If you have questions about an existing insurance policy or looking to acquire some new coverage don’t hesitate to reach out to our team of Insurance Professionals today.  We know how complicated this can be, that’s why we are here to help you.