Shopping around is a good way to save money. That’s true for life insurance, too. You can easily get quotes from different companies but the price you see may not be the price you get because of unique factors such as your physical and financial health. You won’t know the real price until you apply for insurance and get an offer from the company.
Does that mean you’ll benefit from applying for insurance from multiple companies? Not really. You can get a good idea of the price before you apply.
If you have health or financial issues, disclose them during the shopping process. If you’re working with an advisor, he or she can ask insurance companies about your eligibility and get an estimate of the price without identifying you.
Withholding information makes getting an accurate quote more difficult. Medical underwriting will likely uncover your health problems if you apply anyway.
Some advisors advocate for you by talking directly to the decision makers, the underwriters. Since human judgment varies, these discussions and relationships affect the outcome.
Life insurance companies don’t use a standardized application form. Getting prices from multiple companies requires more time and paperwork. The application asks if you’re applying to other companies, too.
Competition helps you
Companies face competition and want your business. They’ve spent money during underwriting at no charge to you and don’t recover their costs unless you buy.
When companies with independent advisors are out of step, word spreads within the industry and they get fewer applications. That’s another reason to be competitive.
If the insurance company is unable to make a competitive offer, they can get quotes for you from reinsurers, who may accept your risk at a lower price. This lets the company keep your business while transferring their own risk.
The bottom line
The good news is that you can limit your shopping and still get a competitive premium. If you don’t like the offer, you don’t need to accept it. That might be the time to shop around. The risks are that you won’t be insured in the meantime, the original offer may expire, and other offers may be the same or worse.
- If you’re being charged more than you expect because of medical factors, you can request that the reasons be disclosed to your doctor. There may be actions you can take to improve your health and reduce your premiums.
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