When you buy homeowner’s or auto insurance, you probably count on your insurance
professional to help you understand the many options and choices. What
deductible to choose? Emergency road service or not? What limits
of liability? Should your teenager have his or her own car? How
much coverage do you need? You value this relationship, but you are wondering
if you might get a better deal on your life insurance if you buy direct and
cut out the middleman.
You might get a better price, and you might not. More importantly, you
may get what appears on the surface to be a better deal, but on closer examination
is not as good as you originally thought.
If you call a life insurance company and apply over the telephone for the life
insurance they quote you, you may be in for several surprises, either now or
First, cutting out your insurance professional does not always result in a
lower life insurance premium. It does, however, mean you will have to
rely on an “800” number and the person answering the phone. As with any
telemarketing organization, there is high turnover so you will probably never
have a relationship you can count on.
Second, insurance plans may appear the same on the surface, but when you examine
the details, all “comparable” policies are not created equal. The period
where the premium stays the same (for term life) may vary; the guaranteed and
current interest rates may vary (for universal life); the investment options
may not meet your needs (for variable life); and the interest/dividend crediting
may not be what you think (for whole life). There are many riders, options,
and other features that can make one plan more suited to your needs. Unless
you know about these options and can tell the voice at the other end of the
phone exactly what you need and want, you may end up with the wrong insurance
Third, your insurance professional knows you and your needs. Someone
you have never talked to before may not know about your disabled son, your planned
pregnancy, or your need for spousal insurance. If they don’t know you,
how do they know to ask about these things? An advisor who knows you and
your family is in a much better position to make sure you obtain both the right
type and right amount of life insurance. They can also decrease the likelihood
that you are surprised, after underwriting, with a much higher premium than
you were originally quoted.
Fourth, you may have existing life insurance that can be adapted to meet your
current needs. This reduces or avoids underwriting and may save lots of
money in new premiums.
Your financial needs are complex and ever changing. Working with a professional
who knows you and can meet with you face-to-face can help you avoid hassles
and possibly costly mistakes when you are buying life insurance.