Cost & Coverage
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The best way to apply for and purchase a life insurance policy.
When you buy life insurance, you have a lot of decisions to make: what kind of policy to buy, how much coverage you need, how long you need that coverage for. But one of the first decisions you may make is where to buy the policy.
There are several places to buy life insurance: you can purchase a plan from an agent, an online broker, directly from the carrier, or even from an organization you’re affiliated with.
The good news: Regardless of where you buy a policy, the price of a policy with each insurer will be same. This can be confusing at first, because your quotes could differ between sources. But once your application goes through underwriting at the insurance company, your rates will bet the same no matter where you submitted your application.
Insurance policies aren’t like consumer products, where the exact same model may be sold for different prices or where Labor Day means big savings. Life insurance rates are registered with the state and highly regulated: there are no discount codes, or special deals. Your premiums are based on how the insurance company rates your particular health profile, and the same underwriters are looking at your application no matter how that application initially comes in.
But even though the prices are the same, the experience of purchasing life insurance does differ depending on how you purchase it.
Most people purchase life insurance from an agent or broker. According to LIMRA, an association of insurance and financial services companies, 89% of the life insurance market is sold by agents or brokers.
Sometime the terms are used interchangeably, but it’s important to distinguish between them.
Independent brokers (like Policygenius) are not affiliated with any insurance company and sell policies from multiple companies. They work on behalf of the customer to prepare applications.
Affiliated agents, on the other hand, are appointed by one or more insurers to sell their products. They work on behalf of the insurance company.
Independent brokers exist to get you the best policy. They aren’t beholden to any single insurer, and they are in a unique position to know which companies offer the best rates for people with your background.
Brokers work with a lot of insurance companies and have seen a lot of applications, so they know the particulars of how each insurance company is likely to treat and rate your application. Quoting tools can’t accomodate for every medication or condition, but a good broker will know how each insurer is likely to view your specific application and be able to recommend the right carrier for you.
Some agents and brokers can go beyond that, however. At Policygenius, if your application comes back from underwriting with a higher rate than you applied with, or even if it was declined, we’ll do everything we can to shop your application around to another carrier to get you a lower rate.
Read more about how Policygenius can help you if you get a modified offer.
Underwriting can take four to eight weeks or more depending on whether the underwriters request your medical records and how responsive your doctors are in submitted those records. An agent or broker can follow your application and keep you up-to-date on its progress so you don’t feel like you’re left in the dark.
Some insurance brokers are more knowledgeable than others, so you can’t just pick a random broker and call it a day.
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Affiliated agents, also called captive agents, are the “classic” idea of the life insurance salesman. Affiliated agents generally work alone or in small offices and they sell policies from one insurance company.
Many people choose affiliate agents that they know from their community, or maybe even personally. Some people like the idea of going to someone’s office, or even having someone coming to their home.
Because affiliated agents only work with one insurance company, they know that company’s offerings very well, including how long the application process takes and which riders are the best deal.
Because captive agents work on behalf of the carrier, they can only get you a policy with that carrier — even if it’s not the best carrier for you. Life insurance carriers can vary widely in their rating of various diseases and situations. For example, if you have a history of cancer in your family but the affiliated agent’s carrier isn’t particularly forgiving of that family history, you could end up paying much more for life insurance than if you went through an independent broker.
Most life insurance agents are paid on commission, meaning they have an incentive to sell you larger policies or more coverage than you may need. For example, term life insurance is the right product for most people, but whole life costs five to 15 times as much. Because captive agents are paid on commission, they could be incentivized to sell you whole life — even if you don’t need it (and most people don’t).
Some carriers allow you to apply to their plans directly — others only sell through affiliated agents or independent brokers. It may seem like a smart idea to go straight to the source, but applying direct from the carrier can leave you without options.
No one is more familiar with the particulars of an insurance company’s plans than that insurance company. If you have specific questions about the plan that you’re applying for, the representative from the carrier will be able to get the answers quickly.
Even if you choose a carrier to apply to based on careful research, it’s possible that the carrier won’t have the lowest rates based on your specific health history. If you only look at life insurance quotes from one company, there’s a chance that you could miss out on a better deal from a company that isn’t so strict about your health conditions, family history, or lifestyle. An independent life insurance agent can not only help you shop around, they also probably already know the best company for you based on the information you give them.
Insurance companies and their employees have an interest in selling more and bigger policies; it’s impossible to get independent suggestions or advice from them.
If you apply direct from carrier, if your application is declined or your rates come back higher than you were quoted, you’ll have to start the whole process over if you want to find a cheaper policy from another insurer.
Some financial advisors are also licensed to sell insurance products, but they are rarely insurance experts.
If you have a financial advisor, he or she will be very familiar with your financial situation and your goals. The main benefit of a financial advisor is that they won’t just give you boilerplate advice; they’ll know you at an individual level and offer a tailored plan of action for you life insurance needs.
Your financial advisor might have a basic understanding of life insurance, but since they don’t spend all day, every day selling insurance, they won’t know the intricacies of the industry — they can’t!
There are other ways to purchase life insurance that are more rare. These include:
Many employers offer group life insurance to employees. If you know you need life insurance, it’s better to purchase your own policy, however, since group coverage isn’t portable if you leave your job (unless you convert it to a whole policy, which could make it prohibitively expensive.
Some associations have affiliations with certain insurance companies. Costco, for example, sells policies from protective. AARP sells policies from New York Life. Again, the major issue here is that the one company they are selling may not be the cheapest company for you.
Sometimes you’ll get life insurance offers from your credit union. Again, this isn’t a good choice because you’re only seeing rates from one company; it’s best to go through a broker who can find the best rates for you.
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Yes, we have to include some legalese down here. Policygenius Inc. (DBA Policygenius Insurance Services in California) (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application.
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