WRP partner Aaron Rubin is often consulted by media outlets to offer insight into complex financial topics. He recently sat down with MoneyGeek to discuss the murky landscape of life insurance pricing.
Aaron explains that companies differ in how they classify applicants and determine prices for individual life insurance policies.
“Every company is a bit different in how they assess risk for their policies, so Company A may rate someone as ‘Super Preferred,’ while Company B may rate the same person merely as ‘Preferred.’ Even if a company rates a person the same, the rates could be different.”
The process is not only variable and opaque but also changeable.
“More frustrating for consumers is that companies A and B will sometimes flip on their pricing, so the company where you got a policy five years ago may not be the most cost-effective now.”
Because of this unpredictability, Aaron recommends working with a broker, who can use their experience with a wide range of companies to help policy seekers find the best rate at the time they’re applying for coverage.
Aaron cautions prospective buyers to be aware of the difference between cost estimates and policy quotes. Often, insurance companies place ads or send out marketing emails that highlight specific rates, but consumers can’t rely on these. A quote, he says, will include a way to purchase the policy or at least make a conditional payment. When insurance companies issue quotes, they must also provide disclosures that are required by each state. If you haven’t received these or been provided a way to submit a payment, then the price you’re seeing is only an estimate.
While it can be tempting to go the quick and easy route of snapping up a no-exam policy, Aaron points out that these are more expensive than their fully underwritten counterparts. You may get more initial certainty about your rate for a policy that doesn’t require a health exam, but going through the process is likely to pay off with a lower premium.
Aaron Rubin is a WRP partner and an experienced advisor specializing in financial, estate, and tax planning. With a rich and varied background that includes law, insurance, and accounting, he’s been a valued part of the WRP team since 2009.
MoneyGeek is a prominent financial information platform that offers unbiased advice and insights to help individuals make informed decisions about their finances. With a team of financial experts and researchers, MoneyGeek provides comprehensive, up-to-date information on a wide range of financial topics.
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