How come I see two different prices for the same insurance plan? I got two quotes from two different brokers.

Asked by Zanna

3 Answers

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Hello Zana,

Confusing, to say the least, right? Here is very likely what is happening when you get two different prices for the same plan. Elemental to the quoting process for all sellers of insurance is assigning a rate class (sometimes referred to as a health class). Think of rate classes as "brackets." If you are a Preferred Plus risk (Preferred Best with some carriers), you fit a bracket for price. Other rate classes are Preferred, Standard Plus, and Standard. On Standard rate class approvals, where there is significantly impaired health, we see "Table Ratings" that increase the cost from there. Preferred Plus is the least expensive rate class.

At the quoting stage, we can send you numbers that reflect our best guess (!). Or, we can do better than that: we can ask you questions in an attempt to uncover info that tells us which bracket you should likely be in so that your numbers will then match your responses. Example: you are healthy in all other ways but tell me that you have High Blood Pressure and have had it for at least 5 years, controlled with a declining dosage of a given medication. Using that info alone, LifeInsuranceToday,US will send you a Preferred set of numbers because the carrier tells us that you will likely qualify for that rate class.

Remember that quotes do not tell underwriters (who approve your coverage) how to price your coverage. Better quotes that are accurate and meaningful are the result of work done by your advisor at the early stages, when you are gathering numbers. The more you tell me the more accurate I can make the numbers, and even then I might give you both a "worst case" and a "best case" set of numbers so you can see the difference and not be surprised later.

Summing it up: the difference of quoted numbers can be a result of how sellers assess your risk and then assign a rate class. When the assessment is not done well, or not at all, you get a rate class and numbers that don't apply to you. When they are different for the same plan you can get confused. Be wary of numbers that come to you without any questions beforehand relating to health conditions, medications, motor vehicle records, etc., since the numbers will be based on mostly nothing at all.

Kirby
LifeInsuranceToday.US
Term.com | 12.21.15 @ 20:15
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:33
L
Answered by Lenny
This is a common occurrence with consumers when they first start to look for coverage. Most people are unaware how the purchase of life insurance works. Therefore they treat it in a similar way to any other purchase. However, what they don't understand is that insurance carriers use underwriters to determine the health classification, not an agent. Good agents will do some preliminary underwriting and educate the client about how the system is designed. They also will know about special circumstances that may allow one carrier to view an applicant's health differently than another. The best advice I can give is to find an agent you trust. Ask friends or family, or do some research online. Find agents that are interested in giving you good information rather than simply showing you a quote engine. Hope this helps! | 12.22.15 @ 19:26
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:33
I agree with Lenny, and something he said caught my attention that could stand to be repeated. Lenny wrote, "...they treat it in a similar way to any other purchase..." Absolutely! With other purchases, the price is not subject to a decision to come at a later date: you buy a ream of paper and the price is the price. Same with a lamp, or a sub sandwich. So, as consumers, we bring our assumptions with us to the life insurance buying context which is different. As advisors, we are in a position to disclose that fact, but that doesn't always happen.

Kirby
LifeInsuranceToday.US
Term.com | 12.22.15 @ 19:38
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:33
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