Life insurance premiums are set by the carrier based on
expected return on investments and mortality based on established mortality
tables. Of course company profit and premium taxes all figure in as well. Premiums
are generally speaking not negotiable because they have to fall on one of the
filed and approved (with the state insurance department) rate tables. I say
they are not negotiable, however it is possible in some circumstances to get a
better rating with appropriate sharing of information with the underwriter.
The entire process starts when you get quoted and begin the
process of applying for the coverage. It is always best to fully explain
medical conditions to your agent so they can assess if one carrier is better
than another due to medical conditions. For instance occasional cigar smoking
rates as smoker rates for many carriers but some will give preferred
non-smoking if all else checks out for preferred. Giving the agent a full picture of your
health allows also the gathering of necessary data for underwriters to fully
understand conditions you may have.
A lot of the price is based on the expected mortality based
on a variety of factors. To that end, it’s best to really understand where you
fall within that data realm. As mentioned earlier it helps to fully disclose to
the agent your medical history so they can pre-screen what carrier likely will give
a great rate. Of course the best rate may or may not be with an appropriate
carrier. I stress appropriate carrier because going with carriers who don’t
have good financial strength possibly puts your policy at risk of not being
fully paid when a claim comes up due to inability of the carrier to pay. It is
very easy to pick one of the carriers with good financial ratings.
So you sit down with the agent, disclose health conditions,
decide on the kind of life insurance you want, and most importantly the death
benefit you want/need. (It should be
based on actual needs since underwriting does look at your requested death
benefit as part of the overall underwriting equation, and excessive life
insurance can be a trigger for higher rates or a decline.) From there your agent should recommend at
least two carriers based on prices and expected underwriting outcome.
If they only offer up a single carrier and say that carrier
is best at all underwriting outcomes you need to check with a second
agent. Each carrier has a sweet spot for
clients they want, or you could call it a target audience and their
underwriting and pricing is set to get that client base. Thus, it is almost
impossible to find a single carrier who is tops at all underwriting outcomes. Also, if an agent always recommends just one
carriers be careful that you are not being sold a policy with a carrier where
the agent’s goal is to hit bonuses or win a contest.
With an application in, you need to be sure that the
underwriter sees all medical information that validates how healthy you really
are. You don’t want to hide anything because that is fraud and would give the
carrier an out from the policy. Be sure to have the agent make notes of medical
records, lab work, etc…that shows things are going well. Also, make sure that when you meet with the
paramed you have not had alcohol or caffeine for at least eight preferably
twelve hours ahead of time. Make sure you have not smoked in a few days since
the nicotine can show up in blood tests for a few days.
Following thru on all of the above things will help you fall
on the best possible rating level. When you get an outcome where the rating is
higher than expected, you should ask the agent to talk to the underwriter to
discuss the reasons you believe you should actually be at a better rating than
what was issued. There are circumstances where clarification of information can
help move you to a better rating, especially when the approved rating was right
on the edge between two classes. The
better class can save at times as much as 20% on rates for the same coverage.
If you would like to speak with a professional advisor about
life insurance in Houston give us
a call.
No comments:
Post a Comment