If you have been in the insurance industry for a while, you have probably heard someone refer to term life insurance as a commodity. The reason for this statement is that, from a high-level perspective, term life insurance appears very basic. A consumer selects a death benefit, chooses the length of coverage (typically 10, 15, 20, or 30 years), and then gravitates toward the cheapest policy. Don’t let them make this mistake! Consider these four items when selling term life insurance and recommending a term carrier to your client.
Insurance carriers continue to look for ways to make purchasing life insurance more convenient for the client, including providing options for underwriting. There are three broad categories for underwriting: fully underwritten, accelerated, and simplified.
Fully underwritten is the most invasive and time-consuming process. However, it typically provides the best prices for the client. Simplified issue products are more convenient—in some cases the customer may have a policy issued the same day. These products can be priced quite a bit higher than fully-underwritten products.
Accelerated underwriting falls in between fully underwritten and simplified issue. The goal of accelerated underwriting is to give the client a convenient process and a competitive price. Depending on the policy’s face amount, the client may only be required to answer health questions on the application. As a result, underwriting times are shortened, but the rate is still competitive.
In the past, the beneficiary was the only person who could benefit from a life insurance policy. Today, many policies have benefits that the insured/owner can access while the insured is still living. For example, if the insured becomes terminally ill, he/she can accelerate a portion of the death benefit. Recently, carriers have added chronic illness riders, critical illness riders, and even disability insurance riders to term policies. When reviewing these riders, make sure to find out:
- if they are built into the policy or if there are additional fees associated with them.
- if the benefits accelerate the death benefit or if they are paid from a separate pool.
- how the benefit amount is calculated.
Conversion options allow the insured/policy owner to convert a term policy to permanent coverage without having to prove insurability. When reviewing conversion options, find out when the client can convert the policy and which products are available to the client for conversion.
Identify if other riders are available. You want to make sure you have these available when the situation warrants them. When selecting a carrier, look for term policies that allow the client to add return of premium, waiver of premium, or children riders.
As you can see, there are a lot of factors to consider when selling term life insurance beyond the price. Let Excelsior help you navigate the term life insurance market today!