Term life insurance

[fep]

Hi,

I want to purchase a 10yr term life insurance for my wife and I. It will cover until we are FI.
I don't want it to be employer dependent.
Any recommendation of a good company to get quotes from ?

Thank you.

[RadicalPersonalFinance]

Call any life insurance agent you know or use any online website.  There are tons.  They will all quote the same companies and there is no variation between agents in pricing.  The variation in pricing comes between insurance companies.

If you have any health issues, make sure you work with someone who knows their craft; there is huge variation in companies based on health conditions and it's important to know which company will give you the best deal for your situation.

[madage]

I used insweb.com when quoting term life insurance. I went with the cheapest AAA (ha!) company, which turned out to be American General (a subsidiary of AIG) and purchased the policy in September 2008. There were a few anxious months after purchasing due to the US financial problems and AIG's problems specifically, but now all is as well as it can be.

[Mactrader]

term4sale.com should get you started. Sounds like a scammy website, but they just didn't think it out when they set it up. It's a very good resource. Bought many times through them.

[TheDude]

I bought both my wife and my insurance through ING. It was the cheapest at the time and a solid company. I quoted on a site like term4sale and then I found a local guy I could buy from. I like to buy from local guys that way at least some of the money goes back into my community.

[fep]

Thank you this is very helpful ;)

[fep]

Hi,

Just curious to know what would be considered good / safe enough for the "Company Rating" in term4sale ?
Is A category overkill... I am not sure what to go for?

Thanks.

[cdngb]

If you call an insurance broker beware that they have their favourite suppliers.  Often they will only quote a few so it may be wise to get quotes form a few brokers.  They do this so that they get extra commission with higher amounts of premium to the supplier.  Be sure to ask who their main suppliers are and get a copy of all of the quotes to be sure that they quoted more than their favourite ones.

Let your broker know if you have any medical condition that may influence the underwriting.  The reason is that certain insurance companies specialize in cases that have the same condition.  Their underwriting rules may be easier than other companies that do not have as much experience.  This is an important reason to use a broker if this is the case.

Using on-line services is good in finding prices.  It is often better to use a broker who can match the price as it is always good to have an advocate to act on your behalf.  It will also save you premiums if you have more than one product at the broker, ie car, tenant or house.

Be sure to let your broker know if your circumstances change.  An example is if you stop smoking your premium could drop by fifty per cent if you have no health issues. 

Also purchase the insurance before you start anything that insurance companies find dangerous.  This could be a job, like underground mining, commercial diving or some recreational activity like sky diving or scuba diving.  Often insurance companies charge extra premiums to cover the additional risk.  If the insurance is in place before you start these they cannot increase your premiums.

Good luck.

[RadicalPersonalFinance]

\Just curious to know what would be considered good / safe enough for the "Company Rating" in term4sale ?
Is A category overkill... I am not sure what to go for?

There's no reason not to buy from an A-rated company. They're just as cheap as a junk company. The cheapest ones for term insurance will be Banner, Protective, etc.  They're buying market share right now. 

By the way, how old are you?  If you're under about 45, don't buy level term...buy annual renewable term. It's a better design and will probably be cheaper over a 10-year time horizon..  If you're over 45, level term can work.

[fep]

Hi,

Thank you so much for your answers.
I am 39. Did not know about level term vs annual renewable term... new to me that.
Not sure what that means... have to look it up now...
I have a NYLife person coming in 2 hours (really insisted to come even though I was not that convinced)... any will get that quote and decide later.

[joseph100]

Thanks for sharing your thoughts. Can anybody tell more about this?

[fep]

Hi,

I have now seen the NYLife (rated AAA+) person.
For a :
- 13 years term
- $400K amount
- man / non-smoker
- level type
- which requires medical checks now for eligibility (seems pricer but safer than getting cheaper term life where you are not required to go for a medical now and could lead to non-payment / difficulties if/when $ is needed)
- also has some king of feature where if I get disabled during the term, a large sum is made available as a whole life insurance... (I think around $600K)

Price : $45/month

Could someone comment on the above conditions / price to help me figure out if I need all that and if that sounds good ?

Thanks

[grantmeaname]

You'd be paying for several years of life insurance that you wouldn't need because you were already FI. You'd also be paying for several years of life insurance when you were very close to FI and would get by okay on just the stash. So it looks like you're paying for 13 years' coverage when you only need like 5 years worth.

[Another Reader]

What does a $400,000 13 year level term policy cost from one of the companies "7years" cites and from one of the quote websites?  And if you need only 10 years, then price that as well.  Looks like they are muddying the waters with some sort of hybrid with whole life.   If you need disability insurance, that's a separate issue.

[fep]

Thanks for the answers. Yes at first I wanted 10 years, but they priced 13 years because they said since my youngest kid is 5 it makes sense to cover until he is 18 years old... so I got the quote for that.

Their point was that websites giving quote online, give products that are not really guaranted... i.e. non requiring always a medical now (and doing the medical later when there could be issues : for ex. I pass away from car crash and the insurance argues and says death reason is actually from some other minor medical cause and end up not paying), and also not paying right away. Do you think it is a real concern / valid point?

Could some tell me what a fair price should be for a 10yr/man/non-smoker/400K and where medical is done now to make sure I am eligible and avoid issues of non-payment later if ever?

[TLV]

Even if you get a quote online, I'd expect the company to require a medical exam and to thoroughly investigate your medical records before issuing the policy. (That's how it worked with mine, anyway.)

I pay $10/mo. for a $250k 10 year term, but I started it when I was 22 - at 39 and for $400k, $40/mo. sounds about right.

Make sure you look into paying annually instead of monthly - most companies will offer a 5-10% discount.

[RadicalPersonalFinance]

Hi,
I am 39. Did not know about level term vs annual renewable term... new to me that.
Not sure what that means... have to look it up now...

Sorry for the delay in answering.  Most people promote level term insurance because that's what they're aware of.  It's the standard, go-to product which is easy to explain and easy to sell.

The problem is that you have to pick exactly the right term for your needs.  If you pick too short of a term and your situation changes (e.g., FI comes later than you thought due to major illness or other unforeseen event) you run out of coverage.  But, if you pick too long of a term (e.g., going with 30-year term instead of 20-year) and you get to the point where you don't need the insurance, you wind up over-paying for the product.  That's because level term insurance products are most expensive for the consumer up front and cheapest at the end.  You overpay in the beginning and underpay at the end.

(This is one of many reasons why level term insurance has dropped in price so much...many consumers drop their policies early and so the insurance companies factor "lapse-based pricing" into their tables.)

The smarter way is to buy annual renewable term insurance.  Each year, your policy renews at whatever the exact cost of coverage is at your specific age.  You can keep the term policies for a very long time (often to age 70, 75, 80, etc), but your beginning premium will be less than the level term in the beginning.

This provides you with the best of both worlds--lowest up front cost and the ability to keep your policy for exactly the right amount of time for you.  It's also possible to do a stair-step plan where you reduce your coverage every few years as your needs decline (and you do this while never over-paying like you would if you had a level term policy.)

However, as you can tell, it took me more paragraphs to explain than a level term policy.  You won't find it quoted online.  Talk to a traditional life insurance agent such as your New York Life agent or from another flagship carrier--Northwestern Mutual, Mass Mutual, etc.

By the way, this does change on age.  For me, most people 45 and younger are better with ART.  Most people 45 and older are better with level term because their lives are more predictable.  That's not a hard number, just a general range.