avoid affordable life insurance scamsDon’t let your desire for affordable life insurance cause you to fall victim to one of the following life insurance scams.

Teaser Rates

You might see an advertisement with some wonderful, introductory price like “as low as $1 a day” for term life insurance. But don’t be fooled. People over 50 aren’t going to get that rate on an ongoing basis.  You might get it for one month. That’s a very low rate offer, and it’s only for very young, very healthy people.

What the insurance company is hoping is that you’ll get sucked into dealing them without shopping around for a better rate than what they’re really going to offer you month after month.  Read the small print.  You want a policy where the premium stays the same, rather than increasing at regular intervals- and potentially pricing you out of insurance when you need it the most.

Check with an independent life insurance agent. They will be able to offer you life insurance that will be affordable for the entire term of the coverage.  They have many options and won’t give you a teaser rate.

Only Whole Life Insurance

If you’re in the 50-plus age range, don’t listen to someone who tells you that whole life is your only option.

Term insurance is still a product where you can usually qualify for a good amount of coverage, even in your more senior years. And, you CAN get reasonable term rates and death benefit amounts as you age.  We prefer level term insurance where the premium and the face amount remain the same throughout the term period.

And there’s also the option of universal policies, which provide the flexibility that many people are after. You can get lifetime coverage with a universal policy that will generally be less expensive than whole life insurance.

Depending on your situation and why you’re buying the policy, a term or universal policy might be the most practical and affordable life insurance for you—so don’t be talked into not considering those options.

A Rate that Seems too Good to be True

Preferred Plus is the best health rating and so of course everyone wants it—it means a better deal. But if you have some medical issues (e.g., diabetes, history of heart disease, smoking) tr take certain medications, it’s a fantasy to think you’re going to get Preferred Plus.

If you’re dealing with an agent who tells you can get this in spite of your medical issues, don’t believe it. It’s not up to the agent—it’s up to the insurance carrier. The agent can only give an estimate, which is in no way binding.

If an agent tries to win your business by promising the ability to get you a top health rating, it’s time to move on and look for an independent agent who’s built a reputation for integrity.   An agent can only give you their best estimate, and if you have health issues, don’t expect the best rating category.  It just doesn’t make any sense.

Be suspicious if you’re dealing with an agent who doesn’t ask you for a fair amount of health information. The more detail agents have, the better they can estimate what your rating will be.  When you get different pricing from two different agents, you need to consider the amount of information they each requested.  More info- better estimate (quote).  Remember, the insurance company will always give you the lowest rate it can under its underwriting guidelines.

Here’s an example:

  • You talk to 2 agents.
  • Agent A thinks you will get a standard rating and Agent B says preferred.
  • You should ask agent A why standard when someone else thinks preferred.  They should be able to explain to you why you won’t qualify for preferred.
  • Applying with Agent A may be your best deal. They will have chosen the lowest cost company at that higher rating.
  • If you go with Agent B and you get a standard rating (the higher rating), you will now be with a more expensive company than if you had gone with Agent A.

The lowest quote is not always the best quote, the most accurate quote, or sometimes even a possibility.

The Bottom Line

To avoid scams and get the most affordable life insurance, it’s best to deal with an experienced, reputable independent life insurance agent who’s built a lasting business on consistently getting customers the best value possible.

Photo Credit: Widjaya Ivan