A few years ago I received a request for life coverage from an elderly gentleman. After meeting at his home and having been seated his immediate question was: “how much is this going to cost?” Without intending to resist the question I replied that I simply didn’t know without finding out about what he needed and what he was eligible for. Then I asked him if he currently had life coverage. He replied that he did but reasserted that he just wanted to know my price and that he was interested in going over previous coverages. I then let him know I’d be doing him a disservice by simply running quotes without seeing his previous policies, knowing how much coverage he had, what type, and when it might expire.
Finally he left the table and returned with a file of his previous plans: four term life plans all coming up for expiration shortly, and a whole life plan. I could quickly see that the man had been sold by several agents who came, made a quick sale, but nobody had actually taken the time to review his coverages. Now here is what the man did not know about his life insurance and what most of the public does not know: term policies do not simply expire at the end of their fixed price; they become what is known as annually renewable with each year having a price rising exponentially. Around 30% of term plans will eventually be paid annually renewable but since the price becomes prohibitive plans go canceled. So this gentleman was on track to spend ten of thousands on his coverage at annually renewable pricing, paying in excess of $100,000 more than what we were able to find. We replaced his four term plans with one preferred rated permanent policy from an A-grade carrier with the lowest price.
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