Top 5 Mistakes to Avoid When Buying Life Insurance…
Here are some mistakes that many people make when buying life insurance.
Mistake #1- Not shopping Around
Years ago, it was virtually impossible for a life insurance agent to be able to effectively “shop” more than a few life insurance companies for the best rate for each individual. Today, it’s very easy for an agent to shop from hundreds of companies, assuming the agent has invested the money in the quoting programs that allow him to do this. If you are dealing with an agent who has this capability, you will be assured of getting a rate that is much lower than the rate you will receive from an agent that only has one or two companies.
Note: If you want the best rates, NEVER deal with a “captive” agent. This means that he is bound by contract to only deal with one company. It would be like buying shoes from a shoe store that only has one style and one size to fit all. You wouldn’t do that, right? Then why would you but from a life insurance agent that only has one company?
Mistake #2- Going to the Dot.com Term Quote Companies
There are several companies out there that advertise heavily on the web and TV, etc that promise to give you the lowest rates. The fact is, the rate with an insurance company is exactly the same no matter who you purchase it from, so there is no advantage to buying it from the DOT.COM company. Additionally, they have hundreds of agents on site, most of which are extremely young and new to the business. They sell hundreds of thousands of policies. Therein lies the problem. Just wait until you need to talk to the agent again to make a change, have questions, want to change a beneficiary, etc. You’ll probably never talk to the agent again, because more than likely he went back to college in the fall (it was, after all, just a summer job). You’ll be in what I call “voice mail purgatory”.
With an independent agent, you’ll get experience and the personalized service you expect and deserve, all at the same rate. Additionally, ask yourself this question; In the event a death benefit was payable (you “check out”, in other words), would you feel more comfortable knowing that your family has an agent that you have established a long term relationship with rather than having to call a 1-800# and talk to someone they don’t know? Dealing with a death claim is much easier with agent involvement.
Mistake #3- Falling for the “Lowball”
There are many agents out there that simply quote the life insurance company’s absolute lowest rate to virtually everyone. Unless you are in extremely good health, you won’t qualify for these rates (only about 15% of the population does). These agents are basically “lowballing” you, hoping to get your commitment only to “bump” you up to the realistic rate later, after you have gone to a lot of trouble to get the policy. It’s the old “bait and switch”.
An experienced agent will ask you in-depth health questions to insure that he is giving you a realistic rate based on what you tell him. So be up front with him, and realize that if you’re straight up with him, you stand a higher chance of getting a realistic rate from the get go.
Mistake #4- Not Buying Enough
This might sound like a sales pitch to sell you more life insurance. Well, to be honest with you, it is! Most people are grossly underinsured when it comes to life insurance. The average person purchases about 4 to 5 times their annual income in life insurance, shoves the policy in a drawer and feels good about it. I am not here to judge that decision. However, you need to ask yourself whether or not you feel comfortable knowing that in 4 to 5 years, your family will be hurting for money.
If you purchased 10 times your income (which few people do), this would only replace your income for about 13 years when factoring in inflation.
Fact is, in order to replace your income indefinitely without ever having to touch the principal amount invested, you would need about 15 to 18 times your income. This is what the life insurance industry economists calls your “Human Life Value”. If you died as a result of a plane crash, etc, the “Human Life Value” is what is universally accepted as the amount needed to replace that person’s economic value to the person’s family and dependents. This is what the lawyers would be asking for. We should all have this much insurance, but very few do.
Mistake #5- Failing the Life Insurance Physical
You might not think you can “study” for a life insurance physical, but you can. There are quite a few things you can do to insure that you get the best results from the physical that the life insurance company will require. Most people have no idea how to insure that you get the best results. Most experienced agents I know don’t coach their clients on how to get the best results, and the big DOT.COM companies never do. If you flunk the physical, or simply have your triglycerides, blood pressure, blood sugar, slightly elevated, it can cost you thousands of dollars in extra premiums over the years. And don’t think you can just run and apply to another company. There is a clearinghouse for insurance companies called the MIB- Medical Information Bureau. Any decision made by one company is listed here for any others to see. Flunk at one, you just raise red flags for any other company you might apply for in the future.
An agent that specializes in the business wants to insure he gets your business, however, most do not know how to coach you to insure the best results.
I Can Help You
I sincerely hope that this report has enlightened you enough to help you with your life insurance buying decision. In closing, let me state that my goal for you is to find you the absolute lowest cost life insurance available, and to make the application process as easy as possible for you. Please know that I am dedicated to that goal.
If you use me as your agent, I promise to work hard for you, to earn your business now and in the future. If you are serious about obtaining the highest quality, lowest cost life insurance, I can help you.
I look forward to hearing from you soon.
Jeff Pratt
Insurance Advisor
