Absolutely yes. It is impossible for insurance agents and brokers to change anything, including pricing, about the insurance policies offered by carriers.
There are many different types of life insurance and the industry has done a good job of making it seem more complicated than it really is. The two primary types are term and permanent. Each has different iterations and it is good to develop an understanding of both.
TERM LIFE INSURANCE
Term life insurance provides coverage at a fixed rate of payments for an established and limited period of time. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the insured dies during the term of the policy, the death benefit will be paid to the beneficiary.
Term insurance is the least expensive way to purchase coverage, because statistically there is a low chance of one dying before the term is up (this is why most term contracts aren’t available at older ages) so they will be keeping your premium dollars and rarely paying a death claim.
Term insurance comes in two varieties: Annually Renewable and Fixed Premium.
Annually Renewable Term (ART)
- Priced based on the the expected probability of the insured dying during their one year of coverage
- Lowest possible premiums because the term length is the shortest and the life insurance company is assuming very low amount of risk
- Automatically renewable without providing proof of insurability, guaranteed each year until the insured reaches a certain age
- Premium will get more expensive each year one owns the policy
- If you intend to own the policy for 5 years or more, it is almost always more cost effective to lock in your premiums for a set number of years.
- Very few carriers offer Annually Renewable Term insurance. The carriers who do are typically carriers whose term insurance is very expensive relative to the market and the only way they can get people to purchase it is to offer pricing on an annually renewable basis.
Fixed Premium Term Insurance
- Coverage is provided at a fixed rate of payment for limited periods of time (called the relevant term)
- After that period expires, the coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and / or conditions.
- Typically, from a cost standpoint, fixed term coverage is the most cost effective choice if the insured plans to own the coverage for 5 years or more.
PERMANENT LIFE INSURANCE
Permanent life insurance sometimes refers to life insurance such as whole life, variable life, universal life, or indexed universal life where the policy death benefit is in force with no duration limit (unlike term life insurance). It is significantly more expensive than term life insurance because the carrier knows that a death benefit will be paid at some point.
Permanent policies have the potential to accrue a cash value. These cash values are based on either market performance, or the performance of the life insurance company’s investment portfolio, or the interest rate environment, depending on the type of policy.
Permanent insurance comes in many different varieties. The most common types are very generally explained here. Please note, if you are interested in one of these policies, email or call us to discuss further as there are many nuances (and advantages and pitfalls) to be aware of:
Whole Life Insurance
- Remains in force for the insured’s whole life
- Requires (in most cases) premiums to be paid every year into the policy
- Comes in two main varieties:
- Participating policies allow for the carrier to share the excess profits of the company with the policy holder (often in the form of what are called dividends). Typically these distributions are not taxed because they are considered an overcharge of premium. The greater the overcharge by the company, the greater the dividend. These have some flexibility after issue with death benefits, cash values and premiums.
- Non-participating policies cannot be altered after issue and the insurance company assumes all risk of future performance versus the actuaries’ estimates.
Variable Life Insurance
- Provides permanent protection to the beneficiary upon the death of the policy holder
- The policy owner can allocate a portion of their premium dollars to a separate account (sort of like a mutual fund) comprised of various instruments and investment funds within the insurance company’s portfolio of such stocks, bonds, equity funds, money market funds and bond funds. The investment performance can help or hurt the integrity of the policy, depending on the performance of the investments.
- All the risk of policy performance is assumed by the policy owner.
Universal Life Insurance
- A flexible, permanent policy offering the low-cost protection of term life insurance as well as a savings element which is invested to provide a cash value buildup
- The death benefit, savings element and premiums can be reviewed and altered as a policyholder’s circumstances change.
- The lowest-cost types of universal life insurance are often called ‘permanent term insurance’ and are appropriate for use in Irrevocable Life Insurance Trusts when access to policies is not allowed and the death benefit needs to be in force for as long as possible at as low a premium structure as possible.
This glossary of common life insurance terms provides detailed definitions of common terms you will encounter during the process of purchasing term life insurance:
Agent: An authorized representative of an insurance company who solicits and services insurance contracts. Also known as an Associate.
Application: A written form provided by an insurance company that is typically completed by the insurer’s agent and, in the case of most life insurance policies, also by its medical examination company. The form provides information about the physical condition, occupation and avocation of the proposed insured. The policy application is signed by the applicant (typically, but not always, the insured) and becomes a part of the information an insurance company considers when deciding whether or not, and on what terms and conditions, a policy should be issued.
Beneficiary: A life insurance beneficiary is the person who will receive the policy benefits upon the death of the insured. You may select one beneficiary, such as a spouse, or have multiple beneficiaries. Plus, if you desire, you can add or change your beneficiaries at any time simply by calling the life insurance company.
Beneficiary (Contingent): The individual(s) designated to receive a death benefit in the event the primary beneficiary(ies) is/are no longer living at the time the insured or annuitant dies.
Coverage Amount / Face Amount: The amount that the policy will pay to the insured’s beneficiaries in the event of the death of the insured.
Conversion: A policy may contain a provision providing that under certain circumstances the policy may be exchanged for another life insurance policy, typically without further underwriting requirements. For instance, term insurance can be converted to whole life or, in some cases, another form of permanent life insurance.
Date of Issue: The effective date of the policy or contract as issued by the insurer. Evidence of Insurability: Proof of a person’s physical condition, occupation, or other factors, utilized by an insurance company to determine the acceptability of the applicant for insurance.
In Force: The life insurance phrase to describe the status of your policy. If your term life insurance policy is “In Force”, then the premium payments have been made and you are currently protected.
Insured: The “insured” is the person who is covered by a life insurance policy. If the insured passes away while the life insurance policy is in force, the beneficiaries will receive their portion of the coverage amount.
Lapse: The termination of an insurance policy resulting from nonpayment of premiums or, in the case of variable life and universal life insurance policies, the depletion of cash value below the amount needed to keep the policy in force. Under certain circumstances, coverage might continue under a settlement option.
Length of Coverage/Term Length: Length of time, or term, that you choose to have term life insurance coverage. Typically, term life insurance is issued in 5 year increments, such as 10, 15, 20 or 30 years. But it is also possible to get a term life insurance policy tailored to your specific needs. For example, you can get a 17-year term life insurance policy to protect your loved ones until your mortgage is paid off.
Medical Information Bureau (MIB): An independent entity that collects and stores medical data on life and health insurance applicants. The information is exchanged among member insurance companies upon written authorization from the insured. Its purpose is to guard against fraud and concealment by helping insurers discover pertinent, yet undisclosed, health facts.
Premium: The payment you make to the life insurance company for your life insurance coverage.
Premium Mode: Premium payments can typically be made monthly, quarterly, semi-annually or annually. The time period you choose is known as your “premium mode”. Proposed Insured: The proposed insured is the person who will be covered by a life insurance policy that is currently going through underwriting. In other words, this person’s life insurance policy is not yet in force. (see also: Insured).
Rate Class: The classification assigned to you during the underwriting process that indicates what you will pay for your term life insurance coverage.
Rated (Table Rated): A rated policy is one issued on a substandard risk with higher-than-standard premiums.
Temporary Insurance Agreement: An agreement between the insured and / or owner of the policy and the insurance company meant to provide coverage while the insured is in the underwriting process. If the agreement is entered into, the insured or owner of the policy submits money to the carrier (usually a few months of premium) with the application and the carrier will provide a death benefit (maximum amounts of coverage usually apply). This death benefit is contingent upon whether or not the underwriting process eventually determines that the insured would have been eligible for coverage.
Rider: A written agreement attached to a life insurance policy or annuity contract that limits or expands the policy’s or contract’s terms or coverage. Riders may increase the premium you pay to the insurance company.
Examples of riders include:
- Accelerated Death Benefit: An optional provision that provides for a specified percentage of the death benefit to be paid prior to the insured’s death in the event a doctor certifies that the insured’s life expectancy is limited (usually 12 months or less).
- Accidental Death Benefit: Provides coverage for loss of life due to an accident that was the direct cause of death.
- Automatic Increase Rider: Available in a universal life insurance policy. Provides scheduled increases in face amount based on a designated percentage, beginning in a designated policy year. This option must be applied for at the time of issue of the base policy.
- Children’s Term Rider (or Children’s Insurance Benefit): Provides level term insurance on children or the lives of the primary insured.
- Guaranteed Insurability Option: An amendment that gives the policy owner the right to purchase additional insurance of the same type as provided in the original policy. The additional insurance amount, based on terms outlined in the policy, can be purchased at specified ages and rates without providing new evidence of insurability.
- Other Insured Rider: Provides convertible term insurance for a spouse or immediate family member of the primary insured.
- Primary Insured Rider: Provides level term insurance on the primary insured. When combined with base coverage, it can reduce premium costs for the amount of coverage as compared to the cost of a permanent life insurance plan of the same face amount. For the same premium, it can improve policy performance on universal life or variable life insurance policies.
- Waiver of Monthly Deduction: Waives the monthly Cost of Insurance charges on a universal life or variable universal life policy for the length of a qualified disability as outlined in the policy contract.
- Waiver of Specified Premium: Waives a specified premium on a traditional product for the length of a qualified disability as outlined in the policy Underwriting Guidelines: Underwriting is the process that life insurance companies undergo for each new life insurance application. They use a set of guidelines to determine the appropriate rate class and can then define the premiums for your life insurance coverage.
You’re ready to purchase life insurance, but how much…and for how long? You don’t want to over or under purchase, but how do I make a good decision for my family?
As objective as most agents try to make this, and it can be an objective process to some extent, this really is ultimately a subjective decision that needs to be made with your loved ones. Please reference the plethora of online calculators for more guidance with the coverage amount you need. A good idea is to take an average of these suggested amounts and go with that. A few of the better calculators we have found are:
Generally speaking, the cheapest term life insurance goes to people who are healthy.
Here are ways to help get accurate test results, and ideally the most affordable term life insurance rates!
Tip 1: Follow Fasting Instructions
Many test instructions say to fast for nine to 12 hours. Water is fine, but nothing else. Some foods and beverages can spike cholesterol levels. Earning affordable term life insurance could be as simple as fasting!
Tip 2: Ask About Medications
Some medications can raise cholesterol (and in the process, raise term life insurance rates). According to the National Institutes of Health (NIH), these medications include some anti-depressants, beta blockers, birth control pills, corticosteroids, some diuretics and estrogen. Ask your doctor if you should stop taking any medications prior to the test. (Never stop medications without consulting your physician.)
Tip 3: Inform the Examiner of Illness
Illness such as flu and fevers can dramatically impact lipoprotein levels (which the cholesterol test measures). Tell the examiner if you’ve been sick recently. You might want to reschedule your exam, or have a second test done if your cholesterol is high.
Tip 4: Sit Quietly
The Harvard Medical School recommends sitting quietly for at least five minutes before the cholesterol test, and remaining seated during it.
Tip 5: Avoid Alcohol for at Least 24 Hours
Alcohol can raise cholesterol levels. The Harvard Medical School recommends avoiding alcohol for 24 hours before the test, and ideally several days before.
Tip 6: Maintain a Steady Diet and Weight for Two Weeks
Cholesterol can be impacted by dieting and by eating excessive calories, saturated fat and foods with cholesterol. Excess alcohol can raise levels, too. Try to schedule the test after maintaining a steady diet and weight for two weeks.
Tip 7: Advise the Examiner about Pregnancy
It’s common for cholesterol to temporarily elevate during pregnancy. If you are or might be pregnant, or recently had a baby, inform the medical examiner. It can take up to a year to return to pre-pregnancy numbers. Affordable Term Life Insurance Starts With Good Health! Affordable term life insurance can be as simple as accurate tests. Many people don’t realize they have some control in this. A few steps can mean a lifetime of savings in cheap term life insurance. If you feel your cholesterol test numbers are inaccurate, or have improved since your last test, talk to an agent. It’s possible to lower term life insurance rates. The main thing is to get covered. You can always review your term insurance and see if you qualify for more affordable term life insurance.
It typically takes 5-8 weeks after your application is submitted and your medical exam is done before an offer is made and your policy is delivered.
This is an important consideration. If your current policy is a term contract, then you can take a look at the pricing of your current contract compared to current market rates for the same amount of insurance and see if what you have is acceptable to you. If you think you want to swap out for a new policy, then we are happy to help you procure one.
If you have a permanent insurance contract currently and are convinced that you prefer a term structure, then we can help you here too. Term pricing is far less expensive than permanent. However, permanent insurance offers some features which term does not and it is important to fully understand the decision.
In either scenario, it is imperative that you not cancel the current coverage until new coverage is in force!
If you want to discuss this important consideration, please contact us.
We enjoy being a very different type of insurance brokerage, one where we don’t hound you for a sale after you’ve shared your information. We are able to respect your privacy and give away so much of our revenue because we are focused on efficiency. We are available to you for any questions at any time, but we’ve made the process as smooth and user-friendly for you as possible:
- Get informed about your purchase. Check out our Frequently Asked Questions to learn about the types of insurance and how much you would like to buy.
- Get a quote. Enter your information into our quote engine and you will get a free, side-by-side comparison of the best prices from multiple highly-rated and lowest cost life insurance companies based on your age, health, family health history and lifestyle.
- Submit the application. Once you decide the carrier you’d like to apply to, select it in the quote engine and provide some basic information (not to be shared with anyone else) as well a good time is for us to call you to take the application.
- A licensed Synthesis agent will call you to answer any questions and gather some more details. This will take 10-15 minutes, and will save you significant time during your phone interview with the insurance company later on.
- The application will be sent to you for your signature. Sign where indicated and send it back to us.
- Get a free checkup. The carrier will send a licensed paramedic to your home or office to examine you at your convenience.
- Promptly answer questions during the underwriting process. The carrier will likely have occasional questions for you as they prepare your policy. We know you’re busy. We’ll try to make this as painless as possible, but the more quickly you reply, the more quickly we can get your coverage.
- The carrier makes an offer which we will email to you.
- The policy will be mailed to you and you send your payment.
- The coverage is in force.
No. It is very important to understand this difference. The quote is the price one is offered when they shop for life insurance and it is based on the inputs they enter into the quote engine. One should try to be as accurate as possible during this process; err on the conservative side when building your quote.
It is prudent to quote yourself in several different underwriting classes (Standard, Preferred, Preferred Best, etc) to get an idea of the range of the likely offer, and then submit an application. The offer is the price the company is willing to offer you insurance for based on your health profile.
The company wants to make the best offer possible as they do want your business; but, they ‘underwrite in a box’ meaning there are certain positive marks and certain negative marks one can get for various health issues: cholesterol, height / weight, smoker / non-smoker, family history, etc. The carrier will simply add all the positive and negative markers in your profile and will make an offer accordingly. These underwriting boxes are very rigid, so preparing well for your medical exam is very important. (Please reference the “Preparing for your Medical Exam’ section above.)
Synthesis is growing fast and word of mouth is consistently pushing us into new states. When you apply, we will probably already be licensed in your state. However, if you submit your form to apply and we are not licensed yet there might be a slight delay before we can take your application while we get appointed in your state. In the unlikely event this happens, we will reach out to you personally to let you know. If you are the first in your state, thank you for the opportunity to serve you! We hope you’ll tell your friends and family about our movement!
No. Synthesis is an independent insurance broker with access to the same policies and pricing as any other insurance broker. By law, we cannot manipulate pricing or policy features. There are absolutely no increased charges or fees, rebates of commissions, or contractual promises made for the policy except which the carrier outlines in the contract.
This is an excellent question. The reason is that the law does not allow for it and we would lose our license to do business. Insurance law does not allow an insurance brokerage or agent to offer anything of value to the client outside of what the carrier offers in their contract. These things are technically called “valuable consideration” and they include rebating of commissions, reducing premiums charged to the client, promises of things that will happen with the contract that aren’t in the contract between the carrier and the owner / insured.
While we are a charitably inclined corporation, we are not a non-profit entity which can offer tax deductions for contributions. By working with Synthesis, you are simply choosing to do business with a company which receives commissions from the insurance carriers and then donates a very significant portion of them to charity.
Clients are understandably uncomfortable submitting some sensitive information to a life insurance carrier, including their social security numbers, driver’s license numbers, income, net worth, etc. All of this information is critical for life insurance to be processed, both at the time of application and also in the event of a death claim.
For example, your social security number is required for the application for several reasons. It uniquely identifies you, which is important in the event of a death claim. The company needs to be absolutely certain that the claimant is who they say they are, and your social security number is the means by which they do that. This number also identifies your medical record.
As another example, the carrier determines the type of offer to make based on lifestyle patterns and a valuable piece of information to them is your driving record, hence the need for your driver’s license number.
They are also bound in how much coverage they can extend based on your income and net worth. The carrier is generally willing to offer up to 10-14x your income, or an equivalent in a metric for net worth they use. Carriers, for example, would not understand the need for someone to purchase $5,000,000 of life insurance if they make $50,000 / year. They would see this amount of insurance as suspect and beyond a ‘reasonable insurable interest’; with legislation like “Anti-Money Laundering” laws on the books, carriers are simply unwilling to extend coverage which seems out of line. It is rare that tax records would be solicited. This is just a normal part of any purchase of any financial instrument of this nature and we hope that with this explanation there will be less concern.
Synthesis is an insurance broker. We do not underwrite insurance contracts. Our role is to help clients find the most suitable policy for their needs, and to help them choose that policy from many top rated insurance carriers. We have no loyalty to one carrier over another. Our loyalties lie with our clients.