McEvoy Ins Blog
Most people have seen life insurance commercials on television or heard a few on the radio from time to time. Unfortunately— too often these types of advertisements can be very misleading to the average consumer. The ads typically boast astonishingly low rates for generous amounts of coverage which, as intended, spurs those thinking about getting a policy into taking immediate action. To the extent that we believe everyone should acquire life insurance protection for those who depend upon them—we can’t help but applaud those who act decisively and make a life insurance purchase. However—the reality is that many people become almost instantly disengaged from the concept again when, after watching or hearing a life insurance advertisement, they’re told that the rate they should expect is considerably higher than the very low rate which inspired their action in the first place.
Obviously—the larger the life insurance benefit and the longer it provides protection the more it will cost. Most consumers know this intuitively.
But what if you were to hear an advertisement for a $500,000 life insurance policy for a 35 year-old male with a 20 year level term period and—since your age and perceived need are a match for what you just heard—you immediately call to take advantage of “The Deal”. Can you reasonably expect to sew up protection for the precise advertised rate?
The best answer is… well… a strong “maybe”. You see—it’s not just your age, gender, benefit amount, and policy type (permanent or temporary life insurance) that dictate the cost of a life insurance policy. In order to know what we’ll actually pay for a life insurance policy, we also need to be placed into an appropriate “health classification” (or “underwriting classification”). Our individual health characteristics, motor vehicle record, habits, hobbies, and family histories all play a role in how our rates are ultimately determined.
It’s the job of your agent to explain this to you and guide through some questions that will help increase the level of certainty that the rate at which you apply for coverage is the rate you will ultimately be offered by the insurance company. After underwriting, your actual rate may turn out to be higher or maybe even lower. If higher—you might astutely and quite appropriately ask, “Why isn’t the rate I applied for and the rate I ultimately receive automatically the same?”
There is not generally a short answer to this question; but it’s definitely a question you should ask.
After an application is made for life insurance coverage at a rate an agent honestly believes is accurate based on how certain key questions were answered—the application is submitted to a life insurance underwriter at the company of choice. This is “Part A” of the application process.
“Part B” of a traditional life insurance application will usually entail a visit from a paramedical professional (paid for by the insurance company) who is tasked with confirming some of the answers to the health questions from Part A of the application, physically measuring your height and weight, and possibly obtaining blood, urine, and (depending on your age and the requested benefit amount), maybe even an EKG. Once Part B is submitted to an underwriter—he or she may decide that additional information is required from a physician to make a final decision.
For the consumer—this isn’t as labor intensive as it sounds. Once the “hard part” (finding a good day and time for the free paramedical exam and completing it)—most of the process is methodically conducted behind the scenes as you await a final decision.
One important thing to know is that there are many types of life insurance products on the market and there are various methods of underwriting as well. Generally speaking—the larger the benefit amount (the amount at risk for the company providing the protection) the more thorough the underwriting process will be. This is the type of coverage situation on which we’re placing our focus right now. It is the traditional process; and it’s the most reliable way consumers can expect to acquire the best coverage at the lowest price.
Hopefully—so far—this goes a long way toward explaining why there can be disparities between the rates we hear (or see advertised) and the rates for which some consumers ultimately qualify. Getting excellent rates means you’re currently in excellent health. Your health history is excellent. The health history of your parents and siblings (usually before they turned 60) is excellent. Your paramedical results were excellent… and so on.
Many people can qualify at the best possible advertised life insurance rates. But certainly not the majority.
The moral of the story: When you know you need to secure protection for your family—choose not to become a victim of advertisement-induced-insurance-premium-optimism that could lead you down the road to disappointment and a delayed decision. On the other hand, you shouldn’t allow yourself to be a victim of ignorance-induced-insurance-premium-pessimism either. In both scenarios there is real risk in not acting in a timely fashion to protect your family.
Once you apply for life insurance, receive an approval, and accept your policy—your rates are certain. Unfortunately… life itself is not.
You can acquire a life insurance quote for yourself in just a few seconds on our site or you can simply call us today at (877) 296-2386 and we can guide you to a fully informed, tailored solution.