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Buying
insurance online? Shopping online for insurance is convenient — but unless you’re well schooled in insurance policy details, you might do better with an agent. We are buying a lot of things over the Internet these days — should we buy our term life insurance that way? It’s possible, but most people should take advantage of having an agent. If you are thinking of buying your term life insurance over the Internet, you should fi rst have a very clear idea of what you are buying and understand the details of an insurance contract. Those details include the conditions under which the insurance will not pay out the benefi t (for example, there is a suicide clause in the fi rst two years), the break points or bands that give you a lower cost per thousand, and the conversion options. A competent agent brings added value to the table. Most agents are independent and thus will shop the market for you, looking not only at the premium, but more important, the contract and the strength of the company. An agent can save you money by re-shopping the market every year or two to be sure you continue to get the lowest rate. In a five-year period, I’ve seen rates go down as much as 30 percent. This could save you hundreds of dollars on the annual premium and thousands of dollars over the course of a 10-, 15-, 20-, or 30-year term policy. When you buy over the Internet there simply isn’t anyone looking after your best interest after that first sale. It is important to understand your conversion privilege. I have seen situations where a premium jumped from $500 a year to $1,500 with an increasing rate each year because the insured did not understand the conditions for exercising his conversion privilege. There is no “grace” period for exchanging a policy. If you miss your opportunity to convert your contract to permanent insurance by exercising your conversion option and you are uninsur- you are uninsur- able, you are left with one of two options: drop the policy or pay high and increasing premiums. Not all contracts give you the privilege of converting the contract for the whole length of the term. For example, you could buy a 20-year level-term policy that can be exchanged for permanent insurance only in the fi rst 12 years. A 20-year level term policy that is fully convertible can be exchanged for permanent insurance any year up until the last day of the 20th year, even if at that point you were in a condition that would be considered uninsurable. Advice: Know the date of your conversion privilege. Two or three months ahead of that date, get in touch with your agent so you can understand all your options. Discuss whether you still need insurance protection and, if so, whether you should buy a new term policy or convert your current contract. Your current health will be one determining factor. In summary, it is your responsibility to understand your conversion privilege and to exercise your right to exchange your policy if you still need the insurance protection. When you choose to convert your policy it is advisable to seek the counsel of a qualified agent who can thoroughly explain your options. Last but not least, don’t you hate to call those 800 numbers to get answers about your policy? It can get so frustrating. If you buy over the Internet and then need service, that is most likely what you will have to do. If you have an agent, you can likely make just one phone call to get the information you need. The insurance costs the same whether you use the Internet
or have an agent — buying from an agent gets you more “bang
for your buck.” Article by Babs W. Hart originally appeared in The Hart Group, Inc. |