It is important to understand that price should not necessarily be the only consideration when purchasing term insurance.
Several questions should be considered:
1. Is the insurance really just temporary? If your client’s health were to fail, would you want him/her to have viable conversion alternatives?
A. Most policies have conversion privileges, but sometimes the cheapest do not allow you to choose from their regular portfolio for a conversion. In such a case your client may be required to pay considerably more to convert.
B. If we are talking about $1/2 million or less, probably no big deal. But, if it is a large amount of insurance, it’s a good idea to go with a carrier with a full inventory of alternatives available?
2. How healthy is your client? The difference between Super Preferred (fairly rare) and Standard risk class is substantial within one carrier.
A. That may not be the case when comparing one carrier to another, depending on the health issues the client has. Concern about various health conditions vary in significance from carrier to carrier. If your client has any health issues and you are purchasing a large policy, it’s best to have us do some pre-qualification before selecting the carrier.
3. Will the client be paying Annual or some other mode?
A. Be sure to check to make sure there isn’t a big surcharge for monthly or quarterly premiums.
4. Are the clients future needs important to consider? While this is often hard to know now, reducing insurance in the future may be an issue.
A. Consider laddering or splitting term policies so that one can be dropped while leaving others in force. Or purchase half the insurance with a longer term period even though that is not anticipated now. The difference in cost may be modest, but the value 10 years from now could be great.