How Some Life Insurance Ads Mislead Consumers
We are constantly bombarded by life insurance ads online and on television that make promises of low rates and guaranteed coverage. If a life insurance offer looks too good to be true, there is usually some fine print that explains the conditions of the offer. Our goal is to make sure consumers know what to look for when they see these types of advertisements. We took a look at a few ads that we saw online and showed how they could be a bit misleading. Here is what you need to know about how some life insurance ads mislead consumers.
You Can’t be Turned Down for Coverage Due to Your Health
We’ve all seen Colonial Penn’s television commercial with Alex Trebek as the spokesperson. The ad is for Colonial Penn’s Guaranteed Acceptance Whole Life Insurance. One of the benefits of this coverage is that “there is no medical exam and no health questions” and that “you can’t be turned down due to your health”. This might seem like an easy proposition for most people, but there is a catch. There is a 2 year limited death benefit for non-accidental deaths. In other words, if you die within 2 years of owning the policy (other than from an accident), your beneficiaries will only get back the premiums you paid in plus 7% interest. Once you have had the policy for 2 years, your beneficiaries will get the entire death benefit if you die. Not only that, but rates for life insurance products like these that require no health questions or medical exams have higher premiums than fully underwritten coverage. These policies do have some value for certain people, but make sure you understand how the death benefit works before you apply.
$1* Buys You $100,000 of Life Insurance
Globe Life puts the asterisk is there for a reason. This is a teaser rate that applies for only the first month of insurance. After the first month, the rate schedule is based on your current age. The headline grabs you though, doesn’t it? Globe Life offers policies with minimal underwriting, which can be appealing to many people, especially those with health issues. Remember though, for life insurance that asks few or no health questions, you can expect to pay more for coverage. So imagine what your premium would be after only paying $1 for the first month. We are not picking on Globe Life. In fact, Globe Life is an A+ rated company for financial stability and offers term and whole life products that are actually reasonably priced. But make sure you have a thorough understanding of how your policy works before you buy it.
You can secure $500,000 in life insurance coverage for less than $14 per month*?
This ad from Select Quote was featured on the home page of its website. The asterisk points to fine print at the bottom of the page that reads: Rates for a 35-year-old female nonsmoker seeking a 10-year term policy based on our best underwriting class. It is true; this applicant could get $500,000 of life insurance for less than $14 per month. Here are a couple of issues we have with this advertisement though:
- In most cases, a 35 year old will need more than 10 years of life insurance. Ten years of insurance will only provide coverage up to a relatively young age of 45, which is still about 20 years from retirement. Quoting coverage for 10 years as opposed to a more realistic duration of 20 years lowers the rate the company can publish to get your attention.
- One other thing to consider is that only a small percentage of applicants actually qualify for “best underwriting class”. You must be in excellent health to qualify for this rate. It is probably more realistic to quote preferred rates or the “second best underwriting class”.
So if you looked at this scenario in more realistic terms, this same 35 year old female non-smoker who qualifies for the second best underwriting class would pay closer to $25 per month for $500,000 of coverage for 20 years. It’s only a difference of about $10 per month when compared to the original scenario but a bit more realistic for the needs of most 35 year olds.
Sites that Promise a Free Quote but Collect and Sell Your Information Instead
When you come to our site, we show you instant quotes when you click the “Display Quotes” button. You will get a list of quotes from many of the most trusted names in the industry. We are an agency that works directly with clients and we do not sell or share your information. With that said, there are many websites out there that promise you instant life insurance quotes only to collect your personal information and sell it to life insurance agents as a lead. Once you enter your personal information (name, phone number, email etc.) and click for a quote, you will be told that an agent will be in contact with you shortly. You will most likely get barraged with calls for about a week from various agents who purchased your information. You will eventually get your quote, but you will most likely have to speak with an agent first. Before you enter your personal information, make sure that you will have instant access to quotes.
How Some Life Insurance Ads Mislead Consumers
We don’t have an issue with the accuracy of these ads. They are written to grab the attention of consumers and the companies in question aren’t lying. The issue we have is that these ads are a bit misleading. Once you look closer at the fine print, you will see that there are conditions to the quotes. Life insurance companies are careful about taking risk. There is always some compromise the consumer must make when it comes to favorable life insurance terms. For instance, if you want guaranteed issue coverage with no medical exam, your policy will have a 2 year limited death benefit period and higher rates than a fully underwritten policy. Before you make any decisions on purchasing coverage, make sure your agent explains the entire policy so that there are no surprises in the future.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
