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Compare identical specs, or the comparison is meaningless
A quote is only comparable when the face amount, term length, and assumed health class are the same across every option. ” $500,000, 20-year term, preferred nonsmoker” is a spec you can compare. A $500,000 quote from one carrier and a $750,000 quote from another tells you nothing. Get every quote in writing with those three numbers visible, and confirm which health class the agent assumed; agents sometimes quote the top class to show a low number you will not actually qualify for.
Look past the monthly premium
Four line items matter as much as the price. First, the conversion option: can you convert to permanent coverage later without new underwriting, and what is the deadline? A cheap term policy with no conversion right is a worse product than a slightly pricier one that keeps the door open. Second, the renewal terms: what happens at the end of the level period, and what do the annual renewal rates look like? Third, the riders included or available, especially waiver of premium and accelerated death benefit. Fourth, the carrier’s financial strength rating from AM Best and its complaint ratio from the National Association of Insurance Commissioners. A low premium from a carrier with a poor complaint record is not a bargain.
Watch the illustrations on permanent policies
Term quotes are straightforward: the premium is guaranteed for the term. Permanent policy illustrations are projections, and agents can present optimistic non-guaranteed assumptions for dividends or indexed returns. Always ask for the guaranteed column alongside the illustrated column, and make the decision on the guaranteed numbers. This is where most buyer’s remorse in life insurance originates.
Get quotes from both sides of the market
Rates for identical coverage differ 20 to 40 percent between insurers, because every carrier’s underwriting guidelines weight risk factors differently. A captive agent sells one company’s products and cannot move you to a better-priced carrier when your health profile fits another company’s guidelines better. An independent agent or broker can quote dozens of carriers. Get at least three to five quotes; it is the single highest-return step in the process.
Finally, buy the coverage before you need the exam results to be perfect. If a health issue surfaces during underwriting, you can still be covered while you sort it out, and a policy that lapses from nonpayment helps nobody, as our guide to life insurance lapse and reinstatement explains. Two related reads before you sign: how health class drives your rate, and whether life insurance payouts are taxable.
