Policy cost: We have identified X number of companies that might offer a meaningfully lower guaranteed premium cost than the policy you are considering, possibly as much as $ annually. This finding is based on the same type of policy (20-year level premium) and the same or similar preferred underwriting classification assumed in the quote/illustration of the policy suggested by your local agent.

No-load quote(s): As a fee-only consulting service, we make a point of obtaining quotes not only from companies selling their policies through agents, but also from companies with “no-load” (i.e., no sales commission) policies that also have very high financial strength ratings. Among the companies with a lower premium quote than the policy you are considering is no-load company Y.

Lowest quote(s) (but note it can be difficult to qualify for the lowest-cost term insurance): The lowest quote is $ ______ based on a super-preferred rating. You might qualify for this rating, but you should understand that companies offering the lowest-priced term insurance have strict underwriting requirements that make it difficult to qualify for the best health class and lowest premium. Reportedly, as few as 15 percent of applicants qualify for the most inexpensive premiums with some of these companies. So the low quotes can sometimes seem like a bait-and-switch when one does not qualify for the lowest premium and perhaps had little chance of doing so in the first place.

The objective, of course, is to find the lowest priced term insurance for which you can qualify, and there is good reason to believe, based on the limited health-related information you have provided, that you should be able to obtain lower-cost term insurance than the premium for the policy that you are considering.

Option of converting term insurance to permanent future in the future without an additional medical exam: While the policy you are considering allows you to convert all or any portion of the coverage for ___ years, we do not believe that this company, based on its past performance, would offer a very competitive form of permanent insurance. Companies with the lowest-priced term insurance do not generally offer the best values for permanent insurance. For any of the term coverage that you might think of converting to permanent insurance in the future, we would recommend term insurance with a company that has a track record of offering high-value permanent insurance even if the term insurance would cost a little more.

Duration of term insurance: Based on your family’s financial circumstances and the current ages of your dependents, we question whether you really need the total amount of term insurance coverage for the period you are considering. If you buy coverage lasting longer than you will need, you will overpay, both with the size of annual premiums and the years for which you pay that amount. If you do not need all of your term insurance for the full 20-year period, for example, you could obtain a meaningful savings by having half of the planned coverage for 15 years instead of 20 years.

Amount of insurance: Most suggested guidelines for amounts of life insurance in the financial press tend to understate the need. The recommendation is often just 5 to 7 times of income – without consideration or mention of whether most all of current income would be needed by survivors and for how long. We recommend an amount of insurance that would be sufficient, along with other investment assets, to generate the income (adjusted for inflation) that you would want to provide for surviving dependents. If that income needs to last for a long time, such as for the life of a surviving spouse, while increasing with inflation, a general financial planning rule is that no more than about 5% of capital should be consumed each year. Based on the limited information you provided in our questionnaire about your income and current investment assets, you may want to consider more coverage than would be provided by the policy that has been suggested to you. We can assist with a more detailed needs assessment if you are interested.

If you like, please call to discuss our findings and suggestions and the additional ways we can help you obtain the right coverage at a fair price.