Term Life Insurance Q&A
- Why should I choose BeyondQuotes?
- Which companies do we represent?
- Is BeyondQuotes licensed where I live?
- Is my information confidential?
- Do you only offer rate quotes?
- How do we choose which companies to represent?
- How much Term Life Insurance do I need?
- What are "level" policies?
- What should be the term length?
- Is it worth insuring my spouse on my policy?
- Can you explain the difference between Term and Whole Life plans?
- I suffer form a pre-existing condition. Can I still be insured?
Applying for a Policy
- How do I apply for Term Life Insurance?
- How do I find the best value plan for my needs?
- What is the waiting period between applying and coverage?
Life Insurance Companies, Agents and their Commissions
Life insurance companies have been around since before America was consolidated as a single nation, before the days of the gold rush and the Civil War, when the frontier was still unchartered and people lived from one day to the next.
Underwriting has grown organically with this nation and many of the companies that were there for our founding fathers are still there, supporting and securing their great-great grandchildren to this very day. We proudly offer policies from these pioneering companies as well as several other highly esteemed providers, some of which are listed below...
Do Life Insurance Agents Deserve Commissions?
By Paul A Starky, CLU Chicago, IL - reprinted with permission, The Joliet Reader- August 27, 2011
Nobody likes to spend money on insurance, particularly life insurance whereby you don’t ever want to make a claim if you can help it. Many people think that insurance agents, like their rock star counterparts, earn ‘money for nothing’; faceless middlemen who skim commission from ‘Peter’ after taking money from ‘Paul’.
There has always been speculation as to what an agent actually makes when selling life insurance, but many believe that whatever it is, it is too much…So what is the deal when it comes to agents and their commission?
A good life insurance agent will always take the initiative. After a long period of time and careful planning, the guy from your church who just happens to sell life insurance has finally got you to agree to let him come over to deliver his spiel...
Step One: the Approach
When the term life agent arrives at your door, you notice how unfailingly polite and considerate he is. He's precisely on time, of course, and when he steps in he is quick to make a mental inventory of your house's interior which he then deftly uses to start the obligatory small talk.
Step Two: the Chat-up
"You sure keep a clean house", the agent might say, or maybe he'll comment on your kids collection of baseball trophies proudly displayed on the mantle. He will then offhandedly mention that his kid also loves baseball but has yet to win any trophies at it.
Step Three: the Image
The agent is immaculately dressed in clothes that are nice, well made, conservative, and not too stylish. His demeanor is somewhat understated, and you could be forgiven for not fully perceiving or appreciating his command of a particular kind of showmanship.
Step Four: the Close
Before you have a chance to usher the agent into the living room where you had expected the meeting to take place, he is somehow already set up in the dining room with two or three brochures (illustrations, he calls them) out for you to look at.
You put on some coffee and while he is in your presence a singular impression forms: he is clearly the nicest guy in the universe. You're ready to part with some cash...
Step Five...the Doubt?
Still, as the presentation progresses, and while the agent is stressing the importance of ROP or some other kind of rider which will bump up the cost, you are struck by an indecent thought which you are ashamed to ask and never do: "What's in it for him?"
Soon this thought takes over, and a thin fissure of doubt begins to crack the foundation of trust that the agent has so carefully laid. Could this nice man be motivated primarily by self-interest? Why do you need this man in your house? Why is it that he made the gesture instead of the other way around?
What the Reality Is...
It is actually quite simple. No one would ever buy life insurance without the prodding of life insurance agents. Their job is to get you to think about the one thing, above all others, people are most loathe to think about: the iron-clad certainty that within 50 years or less you will be dead - possibly much sooner.
They will remind you that if it happens unexpectedly which it so often does, your family can kiss any semblance of the life they currently lead goodbye. In all possibility this guy really does care about you and your family and he doesn't want that to happen...but what is in it for him?
How Much Commission Does My Agent Make When I Buy a Policy?
The figure varies, but is typically anywhere between 100% to 75% of the first year's premiums. Typically, once you have been approved and have sent in your first months payment, your agent will earn that amount times 10 or 12.
If your monthly premiums are $40.00, then there is a good likelihood that your agent will earn around $500 for a standard Term Life policy. This figure is a bit higher for Whole Life Insurance and its many variants.
It Might Sound Like a Lot, But...
You may think that this is an obscene amount, but is it really? If you hold, as most people do, that insurance companies never pay out one cent more than they have to for anything, you will soon find that you are entertaining two contradictory notions.
- Why would a life insurance company make an exception in this particular case and pay out so lavishly?
- The commission payout is the amount required to motivate people to sell life insurance.
If you don't like talking about or considering your eventual demise, there's a good chance that the insurance agent doesn't either. He is there for a different reason. Frankly speaking, who in the world would subject themselves to such a meeting if they didn't have to? They have to talk to smokers, seniors, men and women, healthy people and people who aren't so healthy...
Going through chart after chart, brochure after brochure would be enough to turn most stomachs, without ever getting to the part about how you or your loved one might really make out with the double indemnity rider.
What is Most Probably Right for Me?
For the typical working stiff, a simple term policy of between $250,000 and $500,000 at about 20 years is the right way to go in most cases, especially if you have kids. The fact is that for most people, life insurance is relatively low cost. If you're under 40 and in good health, then it maybe $40/per month. It is a small price to pay for a family's security.
jm 1768 12092011