The hidden moments of one of the most popular American television programs : Shark Tank

Twelve Life Insurance Purchasing Secrets and Techniques

1. The first insider tip is to not linger too long on a life insurance quote.

Do not be duped by the cheap quotes you find online; unless you are in really good health, they do not apply to you. According to statistics, just 10% of applicants receive the cheapest coverage.

 The initial quotation you receive online or through an agent has nothing to do with the premium you ultimately pay. It amazes me how frequently I witness individuals being conned by an agent who offers business X at a lesser cost than another agency.

Regardless of where you purchase them, life insurance premiums are the same price! It is meaningless if one agent or website quotes a cheaper premium. Your age and health determine the cost of any specific coverage. A few outliers exist, but those are outside the scope of this article.

No agent or website can guarantee that the estimate they provide you is correct because the majority of life insurance firms have 10–20 various health/price ratings. To find out the true cost of the insurance, you must apply, perform a health examination, and then go through underwriting (during which the firm does a mini-exam with a nurse in your house and then reviews and "rates" your health).

 Keep in mind that a health assessment also takes into account your family history, driving history, and kind of profession. Only utilize quotations to assist you in reducing your list of options to the best businesses. 

You might wish to think about a low- or no-load policy. You may even get term insurance with no burden and significantly reduce your payments. You won't receive assistance from an agent, which may be valuable if they are very good.

The most crucial element in deciding to price is matching your unique health history with the business most adept at serving that market. For example, firm X could be the ideal option for smokers, company Y for cancer patients, company Z for those with high blood pressure, etc.

2. Avoid term insurance hype in favor of permanent insurance with cash value.

Reading everyone's opinions on choosing term insurance over full or universal life coverage can drive you mad. Big-name websites offer advice that, in my opinion, is almost fraudulent. Simply said, there is NO easy way to decide whether to get term insurance or permanent cash-value coverage.

However, I do believe there is a straightforward rule of thumb: Buy term insurance for your short-term requirements and cash value insurance for your long-term needs. I've read several publications and performed my mathematical calculations that demonstrate the requirement for some permanent insurance if you require coverage for some time longer than 20 years. 

This is brought on by the tax benefit of a permanent insurance policy's increasing cash value. I am divorced, and I have provided for my kids if I pass away. I doubt I'll ever need as much insurance as I do right now. I paid no taxes on the wonderful return I received from my insurance. Because the insurance has so much money in it, I no longer pay the premiums. I let the insurance pay for itself. 

Most life insurance is not what I would call a wise investment. My insurance policies are arguably my finest assets because I purchased them ethically and paid nearly no sales incentives. Since I no longer own them, my beneficiaries will get the money tax and estate-free upon my passing.

Most people should get some term since they have short-term demands like a mortgage or children at home. A permanent policy should be bought in addition to the term policy since the majority of individuals want some life insurance in place for the duration of their lives to help with outstanding medical bills, estate taxes, and burial expenses.

3. Consider applying to two employers at once, according to 

This "trick" is disliked by life insurance firms because it spurs competition and raises the price of underwriting.

4. Stay away from captive life insurance brokers.

Ask for a multi-company estimate from a life insurance agent who works with at least fifty different insurance providers to compare the best rates. Some individuals attempt to bypass the agent by applying directly online. Only keep in mind that you don't save any money by doing that since the insurance company or the online insurance business just keeps the commissions typically made by the agent instead of lowering your rate.

A good agent will also be there to deliver the check and help your loved ones if the life insurance is ever needed. This includes guiding you through some of the more complicated aspects of filling out the application, designating beneficiaries, avoiding errors when deciding who should be the owner and the best way to pay your premium.

5. Refinance previous life insurance plans.

If you are in good health, the price you pay on your previous insurance has probably decreased significantly. However, the majority of firms won't tell you this. Life insurance providers have revised their estimates of average lifespans in recent years. They are drastically cutting their charges since we are living longer. Make sure it makes sense before agreeing to anything because the agent could be doing it to get a new commission.

I'm astounded by how frequently we discover that our clients' old policy costs twice as much as a new one. Consider "refinancing" your existing policies if you need new life insurance. This will eliminate the need for further out-of-pocket expenses and allow you to use the savings from the existing policies to pay for the new policy. Like when you refinance your home, this procedure is sometimes referred to as "refinancing your life insurance."

6. Recognize that the target markets for life insurance firms are dynamic.

Company "X" gives slightly overweight people fair rates one day, but the next month they are quite severe. Because Company Y doesn't have many diabetics on its books, it may be tolerant of persons with the disease and provide favorable prices to them. 

At the same time, firm "W" may be particularly tight on diabetics since they insure many diabetics and are concerned that they have a high risk in that area. As a result, they may charge new diabetic applicants a high premium.

Unfortunately, a life insurance company won't inform you that they have increased their premiums for diabetes when you apply. If you weren't wise enough to compare prices, they will gladly accept your money. The main situation where a smart agent can be useful is this one.

 A smart multi-company agent will be aware of which firms are currently the most liberal with underwriting for your specific scenario because they are continually applying with numerous companies. 

The issue is that this is a labor-intensive activity, and many brokers are either overworked or unprepared to quickly shop around to other underwriters to see who would provide you the best deal. This is far more difficult than simply giving you an internet quotation.

7. Keep client service in mind.

Most consumers who are looking for insurance concentrate on businesses with the best financial standing and the lowest prices. Unfortunately, I am aware of certain low-cost A+ rated businesses that I would steer clear of with a ten-foot stick since their customer service is worse than giving birth to a porcupine.

Before I realized this, I employed a life insurance provider who offered a customer a fantastic deal, but two years later the client phoned me and said, "I have turned in all my payments on schedule, but just got a notification indicating my policy terminated." It found out that the business had missed the premium payment due to several back-office errors!

Because we identified the issue so quickly, we were able to resolve it. The client's family might have had a difficult time demonstrating that the premium had been paid on time and they might not have received the life insurance money, which would have resulted in a loss of hundreds of thousands of dollars, had the client passed away during the brief period the policy had been inactive.

8. If at all feasible, submit an application 3 to 6 months before you need the insurance.

Obtaining a policy should not be rushed if you currently have some coverage in place. But if the first provider does not offer you a fair deal, go ahead and apply right away understanding that you could need months to compare rates elsewhere. 

Although the life insurance market is becoming increasingly automated, it is still common for your application to be delayed for weeks or months while the insurance company waits for your doctor's office to mail a copy of your medical records to them.

You will end up paying 20–50% more if you buy a hastily underwritten policy rather than undergoing the thorough health checks and underwriting that a mainstream life insurance company requires. This is because the insurance company will automatically raise your rates. After all, they are unsure of your health and whether you will survive the day.

 9. If you are healthy, avoid purchasing additional life insurance via your job.

Though I'm sure there are some exceptions to this "technique," I've had a hard time finding any. Keep the free life insurance that your work offers, please. However, you are almost likely paying too much if you are in good health and purchasing additional life insurance through payroll deduction. Your "overpayments" wind up supporting the unhealthy employees of your business who use payroll deductions to get life insurance.

The life insurance company typically has an agreement with your employer wherein they forego the mandatory health assessment for all employees in favor of averaging the costs across the board and providing one or two rates for men and women depending on age. 

Because life insurance firms anticipate attracting a large number of unhealthy customers in this manner, they raise prices for everyone, causing the healthy to overpay and the unwell to receive more affordable coverage. Additionally, the majority of life insurance plans you get through your job will cost more as you age, unlike the guaranteed term policies we advise.

Additionally, group life insurance is typically not transferable when you retire or move employment, so you may need to reapply for a policy even though you will likely be older and less healthy and run the risk of being declined. Even if the group plan permits portability, they typically restrict your options for conversion and lock you into pricey cash-value plans.

I recall assessing a person's additional life insurance. In his opinion, that was a better offer than any insurance I could locate for him. He had no idea that the cost of his group insurance would increase every year. 

His premium would have increased to almost $10,000/year by the time he retired. For about $1000 a year, I was able to find him insurance that would never increase. He could also take the individual policy with him when he moved to employment or retired, unlike his previous group life insurance policy.

10. Apply for a trial period with COD payments.

Only include payment with your application if you urgently require life insurance coverage. Sending a check together with the application was a common practice among agents, I believe mostly because it resulted in speedier commission payments. 

You often receive temporary coverage right away if you submit money with an application, but if you already have enough coverage and are only seeking to acquire lower prices, ask your agent to do a trial application on a COD basis so you only pay after the policy is approved. There is no coverage if you don't submit the money and pass away before paying for the policy.

11. When the nurse measures your height, wear your shoes.

Try to appear as tall as you can when the insurance company sends out the nurse to complete your health check if you are overweight. In most places, you are permitted to wear shoes, and if you are a bit overweight, the underwriter figuring out your health rating and insurance cost will think your higher height/weight ratio looks a little better. Additionally, avoid eating before your exam to ensure that your cholesterol level and other health ratios are at their finest.

12. Watch out for additional benefits and riders.

The majority of plans provide alternatives like the return of premium, kid riders, disability riders, accidental death benefits, etc. Most of these "extras" don't generally make good financial sense when you do the arithmetic on them. 

These riders are often advantageous for life insurance companies because they either cover uncommon occurrences or are so restrictive that the benefit is never paid out. Life insurance companies are in business to earn money. 

Keep things straightforward and concentrate only on obtaining an obligation-free life insurance policy to safeguard your final years. Again, a qualified agent can assist you in weighing the advantages of the additional riders. However, be wary of an agent who attempts to add on every extra ride they can think of.