So, you have decided that you need Life Insurance. What do you need to know? We asked one of the largest life insurance brokers in the United States Big Lou Insurance and here’s what they told us.
Life Insurance is not like car, home, or private medical Insurance
With car insurance you simply give the insurance agent or broker your car’s registration number and a couple other pieces of information. Underwriting takes place in seconds and the broker can have a legitimate quote for coverage within a few minutes.
Home insurance is basically the same with just a few pieces of information about your house and type of lock on your property. Private medical insurance is a bit more involved, with your age and gender and whether or not you use tobacco, but it’s not too bad and in seconds you can have an offer for insurance.
Life Insurance is a very different and complex process. It’s invasive, there’s a thorough underwriting process, and prices and policy options have a massive range from one company to another.
Therefore, you should treat life insurance differently from your other insurance. You also need a broker or financial adviser who treats it differently. Of course, with a few pieces of information, such as your gender, age, height and weight, anybody can get a “quote” from 100 insurance companies.
That “quote” however is subject to a number of underwriting criteria that your broker didn’t ask you about. Some of the information needed about you is available to the insurance companies in real time, but most of it is not. If you use a good insurance broker, they already know this and may ask you to go through their prequalification process.
Otherwise, life insurance companies will want to examine your driving record, your prescription drug use, your lifestyle and more…Information from previous life insurance applications can be accessed quickly by the insurance company, but not your broker or financial adviser when providing that “quote”.
The information that is most needed by the insurance company is contained in your medical records which are not digital and are protected by privacy laws. The records are with your doctor and have to be sent to the insurance company during the underwriting process. There are a myriad of things your broker can’t possibly know in a few minutes to give you an accurate “quote”.
So, do you want a broker who can run a bunch of low “quotes” or a broker or financial adviser who will take some time to get you the best possible rate?
So What Can You Do To Get Acceptable Life Insurance?
First, remember that a “quote” is just a “quote” until an application is submitted, fully underwritten, and your policy is delivered.
As mentioned above, a quote in life insurance is just that—it’s a ballpark figure that can and will change.
Watch Out For the Bait and Switch Sales Process
Remember—unlike in car, home, or private medical insurance your quote is incomplete. Because of this fact, many brokers simply quote you the lowest possible rate from their preferred insurance company so you will just say yes, knowing that when your rate comes back higher than expected they can rely on your desire to get coverage rather than start over somewhere else.
It’s a sales ploy used by most insurance brokers out there. The goal is to just get you into the lengthy and burdensome process so they have you locked in. It works most of the time. What you need to know is that you need to give your broker a lot of information about your health profile to get a realistic quote.
Very few people get the best rate possible, and many people get hung up on rate class description rather than on reality. You hear the word Preferred or Elite or Best Class and you want to be the best. It’s just another sales tactic.
What you don’t realize is that the third best rate at one insurance company can be lower than the best rate somewhere else. Instead of being focused on what the sales guy wants you to focused on, the lowest “quote”, you should be focused on all the details that are going to determine the price of the policy that is actually delivered to you. While you were focused on the lowest “quote” your broker or adviser missed the fact that your family history precluded you from getting that rate and if you had applied at another insurance company you would have ended up with a lower price. What do you want, the lowest “quote”, Or the best rate possible based on your health profile?
Use an Experienced Insurance Broker that Will Get to Know You
Insurance Companies have niches. While most insurance companies have some similarities, they each have a sweet spot that your broker needs to find. The Insurance companies don’t advertise all their niches, and so the experience of your broker plays a huge role in making sure you apply with the right carrier. To do this correctly, your broker needs to know a lot of information about your personal health profile.
Your Broker or Adviser Makes the Difference
Your choice of the life insurance broker or adviser to work with can mean hundreds if not thousands of dollars in savings each year. For all the reasons explained above, your broker or adviser needs to be a full time professional, not just trained in the art of salesmanship, but trained in underwriting and in finding solutions. If your broker is brand new, look elsewhere. If your broker or adviser works with only one company, look elsewhere. If your broker or adviser tries to get your banking information on the first call, look elsewhere. If your broker or adviser doesn’t ask detailed questions about your health, look elsewhere. If your broker or adviser doesn’t provide specific solutions based on a knowledge of your health profile, look elsewhere.
If You Have a Few Health Glitches Ensure You Find a Specialized Broker
If you suffer from a chronic illness like diabetes, or you’re overweight, suffer from a heart condition or were recently divorced—your life insurance needs are unique and more complicated than someone who is in perfect health.
You should seek a broker with experience in your particular health condition. If you’re diabetic—find a broker than works exclusively with diabetes sufferers. If you’ve had a heart attack, again seek council with a life insurance agent that has works with heart disease patients in the past.
A broker with experience in impaired risk life insurance will save you a ton of time and money—they know the ins and outs of the process and they know which insurance companies to place your policy with
Actively Participate in the Process
It’s important that you collaborate with your life insurance broker and participate in the process. Remember to be upfront about your health conditions and so they can work with the insurance companies underwriting departments to find you the right company for your unique needs. If you need any help with the process feel free to reach out to Big Lou Insurance at BigLou.com.