Ideas, tips and news about life insurance and the uses of life insurance

I don’t know when it happened for me, but I think it was about 3-4 years ago when my online purchases outnumbered the purchases I made in a typical sales environment. It is now rare that I don’t at least do some comparison shopping online before I make a purchase (as I did recently when purchasing a new car). I love the convenience (don’t even get me started on shopping for clothes in a mall) of sitting at home or work (during a break, of course) and doing my research and, ultimately, making the purchase online. I even get excited when the UPS man makes the delivery.

When we started our life insurance website six years ago, after having sold many policies over many years in the manner (in my clients’ homes or offices), we were excited about the prospect of simplifying the life insurance buying process. We started out wanting to create such a website where people could research different types of policies, estimate their needs and search a database of life insurer’s quotes (anonymously), and ultimately leave us their contact information so we could follow up with a phone call and conduct the sale transaction over the phone in much the same fashion as we did in their homes and offices.

While many people still want to have these discussions (in person or on the phone), we have found there is a large portion of the population that would prefer to conduct their business solely via the Internet. While we are always more than happy to discuss life insurance needs with a prospective client, we now know that in order to accommodate the Internet-Only Folks, we need to automate as much of the process as possible. You can now learn about life insurance, compare quotes from the major insurance companies, begin the application process and schedule the required medical exam all with a few keystrokes and button clicks. Of course, if a person has questions or concerns that need to be addressed, our representatives are always available via telephone or email.

We are looking forward to making improvements to our process in the near future to the end of a fully automated system. To that end, we will be conducting surveys to find out what people need and want in this experience. Once we have compiled this data, we will incorporate changes (that are technically possible) to the system that fill these needs and wants. And to all those who still want to hear the voice of an experienced insurance representative, we will always make that available to those who don’t want a Fully Automated system.

You know you need term life insurance but you can’t decide on the death benefit amount or the length of term because you see the needs changing over time. You might be a good candidate for layering or laddering several term policies.

As an example, we have a 45 year old married male with two children, ages 5 and 10. He has 10 years left to pay off his mortgage. Looking at his needs, we see his insurance needs as the following:

• Ages 45-55 – $2 million to replace his income, cover the mortgage, college costs and final expenses.
• Ages 55-65 – $1 million to replace income, cover college costs and final expenses.
• Ages 65-75 – $500,000 to replace income (or pension) and final expenses.

Typically, he might look at these options;

• He could purchase a $2 million permanent policy but the premiums are cost prohibitive;
• He could purchase a $2 million 30 year term policy, but the premium might still be more than he wants to spend;
• He could purchase a $2 million 10 year term policy and plan to purchase an additional policy in 10 years but he might not be insurable at that time or;
• He could purchase a $500,000 30 year term policy but that would leave him under insured for the first 20 years.

Here’s where layering can come in handy. I would recommend:

• A $1 million 10 year term policy and;
• A $500,000 20 year term policy and;
• A $500,000 30 year term policy.

This would give him $2 million for the first 10 years, $1 million for the next 10 years and $500,000 for the next 10 years.

As you can see above, this would provide the right amount of coverage at the lowest possible premium. We don’t recommend this for everybody, but in the right situation, it saves the client money while giving him adequate coverage.

The cost of life insurance, specifically term life insurance, has been at historic lows for the past several years. I believe that anyone who has secured term insurance, especially with terms of 20 and 30 years, has gotten a real bargain. Insurance companies have been jockeying around for competitive position and the consumer has been the real winner.

We have seen several companies increasing their premiums and/or removing longer term periods (30 years) from their product lines. Others have removed popular products such as Return of Premium Term life insurance. We’re even seeing some tightening of the permanent life insurance market, with many carriers raising their premiums.

If you need life insurance, I truly recommend that you purchase it soon, as we expect the market to tighten some more, resulting in even higher premiums. We’re not getting a lot of advance notice about increases, either. Your may have received a quote and submitted your application, but the insurance companies are giving very little grace period to the increases.

If you have a group policy at a job that will be phased out soon, look into replacing the group policy as soon as possible. It will probably save you some money in the long run.