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I though term life was cheap! Do I need to shop around?

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  • I though term life was cheap! Do I need to shop around?

    Got my quote for term life with Principal. And its way more than I thought - the rub is I have Crohn's disease, stable/asymptomatic for 23 years and on the same medication the whole time - mercaptopurine. After the whole process, medical exam etc I was approved for their "Standard Plus" class. 30 years 3M plan is $3700/year.

    I feel a little obligated to go with it because I went through the whole process already, but would it be worth getting other quotes specific to my situation? Perhaps another company would put me in a better class? Is there a way to find that out without going through the whole medical exam thing, my agent suggests this is my best option but I don't see how he could know that without quotes from other companies. This is about 2x what I thought I would pay (using preferred plus on term4sale) so it also makes me want to have less coverage.

    More about me: 35M non smoker no risky business, wife stays home with 1 year old. Federal student debt 140k, no house, net worth around 0, income 450k.

  • #2
    It's always worth it to get other quotes with regards to many things but certainly insurance.

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    • #3
      30 years, 3M is going to be an expensive policy and likely much more than you need. Split it up and you can probably lower the rate. Or shorten the term to 20 years and look how much less expensive it is.

      How about 10 years $2M and 20 years $1M. Or ten years $1.5M and 20 years $1.5M. Or 10 years $1M, 20 years $1M, and 30 years $1M. There is a good chance that you will not need any life insurance from age 55-65 and an even better chance that you will not need a full $3M of life insurance at age 64, so there is no need to pay a rate that assumes that you do.

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      • #4
        Why do you need a 30y policy? I bought a 10y and 20y policy for 1.5M and have 1.25x salary through work.

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        • #5
          Agreed. Shop around for comparison. While you’re at it, consider a laddered term life policy:

          Instead of a single 30 year 3M policy, consider a 10 year 1M + 20 year 1M + 30 year 1M policy. Effectively, you’ll have a 3M policy for the first 10 years, then 2M policy for the next 10 years, then a 1M policy for the last 10 years.

          As you accumulate assets, you’ll have less need for the full 3M policy and you’ll save a significant amount on premiums (~30%) from the beginning.

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          • #6
            Originally posted by VagabondMD View Post
            30 years, 3M is going to be an expensive policy and likely much more than you need. Split it up and you can probably lower the rate. Or shorten the term to 20 years and look how much less expensive it is.

            How about 10 years $2M and 20 years $1M. Or ten years $1.5M and 20 years $1.5M. Or 10 years $1M, 20 years $1M, and 30 years $1M. There is a good chance that you will not need any life insurance from age 55-65 and an even better chance that you will not need a full $3M of life insurance at age 64, so there is no need to pay a rate that assumes that you do.
            This is exactly (or very close to) what I did, a ladder with much more in early years and declining later. The point of this is to help balance assets and liabilities should anything occur, you dont even have many liabilities it appears but a windfall for survivors is nice. You hope to build up assets in the beginning that change your scenario and thus you require less.

            No need for that insurance if your assets have you covered, never forget the real purpose of the instrument.

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            • #7
              I went through PolicyGenius - it was quick and easy to get quotes from 20+ companies. Simple to set up the actual policy as well.

              I think the WCI website has some independent agents listed who might be helpful too. But this is definitely a scenario where you want to compare many different companies. It's easy to do so and you can rest assured you'll be getting a competitive rate.

              Completely agree with the comments above about laddering.

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              • #8
                You should just do a pre-scan with about 50 carriers and then you will find out really quick if that offer is spot on or if you should look elsewhere. Probably will take you about 10-15 minutes and your agent a few hours of time, answers are usually back in 4-5 business days.
                Scott Nelson-Archer, CLU, ChFC
                303-953-0263 Direct / [email protected]

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                • #9
                  “For term insurance policies, Prudential’s options are:
                  • Term Essential.
                  • Term Elite.
                  • PruTerm One”
                  One 30 policy is probably not what you need.
                  The bells and whistles also add to costs.

                  Basic term life is what you need. This is a commodify item. Shop what you need and don’t buy bells and whistles.

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                  • #10
                    Don't forget to account for SS survivor benefits, but personally I chose not to ladder.

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                    • #11
                      I doubt 30 year 3M is necessary with your income you should be able to self insure before then

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                      • #12
                        If you have a medical issue you need to shop around. You also probably don’t need 30 years if you’re saving well.

                        My wife also has well controlled IBD on local therapy and had the same issue — she doesn’t even need systemic meds. But insurance companies aren’t doctors. They don’t know the difference. So shop around because the rates will vary widely.

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                        • #13
                          Inflation.

                          The term policy pays nominal dollars. 10 or 20 years of inflation will dramatically reduce the value of those nominal dollars. Rather than guess at the amount needed, do some planning.

                          Will there be more kids? What is the cost of living in your area? Are you now or do you expect in the future to help out parents or other family members? How much do you plan to pay to help with college costs? Grad school? Will you be buying a house? Will the spouse go back to work later? If so, what income might they expect?

                          These answers can vary widely among people with the same income and assets. Such people would need very different amounts of life insurance. Work your way through and come up with an informed decision about how much insurance you need and for how long.

                          For now, you could take the policy, then do financial planning and shop at your leisure.

                          You could try the various online services to look for policies. Given the health issues, you will not know the real rate until the company goes through underwriting. Decide whether you are comfortable with waiting for that to happen.

                          If it were me, I would get a policy in place now then do my planning and shopping. If I were to find I needed a different amount, different term or could get a better price, then I could switch.

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                          • #14
                            Originally posted by VagabondMD View Post
                            30 years, 3M is going to be an expensive policy and likely much more than you need. Split it up and you can probably lower the rate. Or shorten the term to 20 years and look how much less expensive it is.

                            How about 10 years $2M and 20 years $1M. Or ten years $1.5M and 20 years $1.5M. Or 10 years $1M, 20 years $1M, and 30 years $1M. There is a good chance that you will not need any life insurance from age 55-65 and an even better chance that you will not need a full $3M of life insurance at age 64, so there is no need to pay a rate that assumes that you do.
                            30 year typically costs double a 20 year. This policy seems excessive and that is why it is expensive. As you suggest stacking policies is probably cheaper and doesn't over insure in the later years.

                            Also since he has a medical problem, he definitely needs to see an independent agent and not a captive agent and not use an online aggregator.

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                            • #15
                              What is wrong with getting prices from captive agents and aggregators?

                              These quotes are free for the asking.

                              If he does not like the policies he finds by doing his own shopping, then he would be under no obligation to buy them.
                              Avoiding those sources of quotes simply means he will do an incomplete search and perhaps miss the best option.

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