General Question

LuckyGuy's avatar

Can you help me compare life insurance rates?

Asked by LuckyGuy (34730points) February 7th, 2014

It seems to be impossible to compare rates without giving all sorts of personal info to an endless number of companies.
For simplicity, I want to compare simple term life insurance for a healthy, nonsmoking, 60 year old male with $100,000 coverage.
Metlife charges $72.40 per month.

What do you pay? If you are above or below that age a few years that is close enough. I want to know if Metlife’s rates are high.
(After all, they are paying their top dogs from $2 to $13M and that cash has to come from somewhere.)

Don’t forget to scale your answer up or down to make it $100,000 coverage. You can PM me if you consider your info personal or don’t know how to scale it.
If I get enough data I will make a comparison chart and publish it here. Thanks!

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23 Answers

Cruiser's avatar

That does seem high but I would have to say your medical history has to play a role in your premium. Underwriters are pretty stringent on prior medical conditions and yours I would venture to guess is what is jacking up your premium.

Maybe time to shop around. I get good rates with Pacific

LuckyGuy's avatar

The rate I quoted is for a healthy guy with no medical test required.
I will check out Pacific.

I am PMing you now.

Cruiser's avatar

@LuckyGuy My insurance guy told me you can write or omit whatever you want on the application because they will most certainly do a search through the Medical Information Bureau and find your whole medical history. At least that is what I would expect.

I have a $12,000,000 life insurance policy (for my business purpose) and when I applied the medical exam proved I had high blood pressure and the one insurance company took a step back and rated me sub standard…once I got under physician care/treatment for the HB…we shopped the policy and found another carrier who gave me a standard rating and now that my HB is under control we are re-applying to hopefully get a preferred rating.

My insurance guy also explained that there are carriers that shy from certain pre-existing medical conditions and other carriers that will underwrite policies for the same.

zenvelo's avatar

I am in the application process for a $1 million policy that keeps the rate flat for ten years. I am 58, no smoking, no alcohol, high blood pressure under control. My cholesterol from donating blood a week ago is 188. My body mass index is 22, my weight is 166. (On a what is your real age questionnaire I am 48).

My premium will be $3,380 a year, so on a comparable basis, that would be about $28 a month. But there is some overhead in the premium, so $35 would be more comparable.

Try AIG Direct, call them for a quote..

LuckyGuy's avatar

@Cruiser @zenvelo That is great info and just what I’m looking for. I will have to check to see if the rates quoted are for a fixed time. To be honest, I don’t think I need insurance at all. My stats are flawless (except for that pesky prostate cancer thingy) and I am in great shape BMI 21.8. If you said right now, “Turn off your pc and run a mile right now.”, I could do it. (Actually there is too much snow outside now and the temp is 10F.) I figure my chances of dying are much lower than other guys and I have enough “in the bank” to take care of things when I’m gone.
Why should give money to MetLife so their CEO can feed higher grade hay to his polo pony?
I would like to hear from other guys and get their rates. This can be useful info for everyone.

tobycrabtree's avatar

Well I would like to suggest you to get online term life insurance quotes and compare it according to your need.

zenvelo's avatar

@LuckyGuy I didn’t know you’d had prostate cancer; I do know that puts you in a whole different risk category.

LuckyGuy's avatar

@zenvelo Yes. The key words are: “had it”. I left my rotten prostate in a hospital bio-hazard bucket over 4 years ago. My PSA has been zero ever since. Your chances of getting prostate cancer are greater than mine now, pal. (And I can pee like a race horse. -You’d be jealous.)

Inspired by @tobycrabtree I looked online and found this site, Beyond Quotes . If true, I am paying way too much.

Cruiser's avatar

@LuckyGuy You really should consult with an insurance professional especially with your medical history. Life insurance policies are chock full of exclusions for undisclosed and or prior medical conditions. Rest assured when you die they will fine tooth comb your medical history and if there is anything they can hang their hat on to getting out of paying the benefit they will. Trust me…I went through this proces now twice in my recent past and have had a thorough briefing on these fine print technicalities. I would even go as far as suggesting you insist they put it in writing concerning your prostate procedure and treatment so it is documented when you apply and they give you your rates. A penny saved is not always a penny earned with some insurance companies.

LuckyGuy's avatar

@Cruiser Good info. I will make it perfectly clear that I had it and let them know they are free to look where the sun don’t shine. No doubt they will do everything the can to invalidate a claim.

I’ll collect more info before I do anything rash. I have insurance now through my company group policy. It just seems more expensive than it should be.

Cruiser's avatar

@LuckyGuy That makes less sense to me now that you mention a group policy. Unless a bunch of people in that group are train wrecks of health, group policies usually give the best rates. Keep digging.

Wealthadvisor's avatar

You really need to have a quote done for your specific medical history and situation. Each insurance company has its own actuarial tables and investment return for each book of business, (preferred, standard, Rated, etc.) Rates are set based on number of deaths, age, medical history, and investment return. Companies also have different charges for different medical conditions. Some companies will not issue a policy, for example, for any kind of cancer for five years. Other companies have different wait periods and charge accordingly.

You did not specify if the quote you received was for one year, 5 year, 10 year or 20 year term. The length of the policy also determines cost as well as face amount.

There is one important item that needs to be mentioned here. Despite what you may have read, seen or heard, term insurance is the most expensive form of life insurance because of the lost opportunity cost of the term. 100% of you premium dollars is invested by the insurance company. If you outlive the coverage, all the money is gone.

Here is an example. Two companies. Cincinnati Life, 60 year old male, $58.61/month. Midland national $83.44/month. Both are 20 year level term. $100,000 face amount. Already you can see the difference in cost. Let us look at the Midland policy. $83.44/month or $1001.28 a year.

Over 20 years, the premium cost is $20,020. The lost opportunity cost is $31,000. This what you could have earned on the money had you invested it at an after tax rate of 4% instead of buying insurance. Assume death at age 85. LOC to life horizon, $37,716. Loss of death benefit, $100,000. Total loss of wealth to the family $137,716.

What you may also want to compare is a $100,000 permanent insurance policy. See what the premiums are for $100,000, what the cash value is in 10 years, then in 20 years, subtract the premiums from the cash value to determine the net cost of insurance. Sometimes you will find at older ages the premium and cash value will be very close after 10 or 20 years.

You may also want to consider Return of Premium term insurance. Premiums are usually higher, but you get all your premiums back at the end of the policy.

LuckyGuy's avatar

@Wealthadvisor Thank you! Great info. I will break out the calculator.

I am of the mindset that unless I die “before my time” it is better to keep the money in my own investments rather than giving it to the insurance company. I will look into your example a little more carefully. Right now I think I am missing something. For example the Midland policy LOC is 37,717 with a death benefit of 100,000 so It appears to me the value to the family wealth is 100,000 – 37717 = 62283 not 137716. Like I said I must be missing something. What would the coverage be between years 20 and 25, (age 80–85)? Or does the life insurance benefit go away at the end of the 20 year term.
This is all moot of course since I don’t plan on ever dying. ;-)

Cruiser's avatar

Even though your current state of health says otherwise to you dieing anytime soon…this is why you should have life insurance of some form if you feel there is need to have money for your survivors or pet if you die an accidental death.

kritiper's avatar

First, decide if you want “term” life insurance, or “whole life” life insurance.
“Term” insurance only pays if you die before age 65 while “whole life” pays after you reach a certain age, like a retirement plan.

LuckyGuy's avatar

@Cruiser Great list. Accident insurance is relatively cheap. $12 per month for $750,000 coverage.
I didn’t anything on the list about being attacked by coywolves (which inhabit this area).
.I wonder if being eaten by a pack would be considered an accident.

Cruiser's avatar

@LuckyGuy Only if it looked like you were taking the garbage out and slipped down the back steps…hit your head and were knocked unconscious. Carry a bag of chicken bones and empty soup cans with you every time you go outside.

kritiper's avatar

Yeah, those top dogs make some good bucks because with “term” insurance, you’re betting that you’ll die before you reach age 65, and their betting you’ll live longer because the average life span of a man is 76.6 years. So, most of the time, they win the big bucks because the odds are on on their side. (With term insurance, you pay until you turn 65, then the policy ends. They shake your hand, say “thanks” and head for the bank with their money. End of story.)

Wealthadvisor's avatar

It is not $62,283. You are losing the lost opportunity cost on the premiums, ($37,717,) and the family is losing the $100,000 death benefit, (total $137,717) This calculation is even worse if, for example, you die after the insurance has expired and your spouse is still living. She could have invested the death benefit. So there is also the lost opportunity cost on the death benefit as well. I did not include that in the original calculation for simplicity.

You need to remember that any kind of permanent life insurance is not an investment. It never was and never will be. Too many agents try to sell the cash value of permanent insurance as an investment. It is not. Just remember that most insurance companies are providing a 4% fixed return on the cash value. In today’s market place, is if very hard to find money market rates at 4%. So if you have “safe,” money just laying around earning 1%, it could be earning 4% inside the insurance policy. You just need to look at your investment portfolio and see what you net after tax is compared making some changes to increase your ROR.

Your investment dollars should stay in your investments. The premium dollars going into permanent life insurance creates a living benefit of the life insurance. For example, a $100,000 permanent insurance policy with dividends may buy an additional $20,000 or $30,000 of additional insurance. This may mean the death benefit may be $120.000 or $130,000, not $100,000 This means, during retirement, you may use up $130,000 of invested assets without the worry that a surviving spouse or child will have less in a retirement fund. The in force insurance is a permission slip to use those dollars, (medical or family emergency,) knowing the account will be reimbursed. This is called asset insurance. I have a number of clients who first came to me with no retirement asset insurance who now have that benefit.

Most companies will not issue a policy after age 80. You most likely will not be able to find another term policy at that age.

If you are still having trouble understanding the LOC calculation let me know and I will provide another example. Sometimes using the calculation for say a 40 year old buy term to age 60 is easier to understand.

LuckyGuy's avatar

@Wealthadvisor I sure do like talking to you! Thank you for being patient.
I am still confused by your description of the LOC of $37,717. That seems to ignore the investment I would make with the $83.44 /month (or 1001.28 per year) I would be investing in the stock market (or wherever) rather than buying insurance. Assuming I invested at 4% I would have that same money. It is not gone. Certainly if I invest in a simple index fund I would be well ahead of 4% in the long run.

I do not know when I will die, and since real fortune tellers do not exist, my 30000ft perspective of any game of chance is “It is better to keep as much of my money within my realm of control.”. If I must buy a product, I prefer to sacrifice the minimum amount of resources necessary. “For profit” companies are in the business for profit, not “for me”. The CEOs and management make decisions that benefit them personally first and the shareholders second. The customers are always the source of the revenue stream. Funds merely move from one hand to another .
I am not picking on insurance companies. Virtually all service industries fall into this category from the nail salon down the street to the big companies doing taxes.
There are a few some industries that actually create wealth. They include: mining, manufacturing, farming, and construction but that is another discussion. .
Unless there is a service I need, my rule of thumb has always been to avoid giving control of my resources to middle men.
I am comfortably set financially. (Don’t tell anyone.) I can afford to “put away” funds and call that an insurance policy. If I live longer than 4 years short of the predicted value from the actuarial table, I win.
I do buy the statutory insurance required for doing business in my state. I buy the required car insurance needed and of course I buy health insurance.
I am in a good position and can afford to take the risk. All my life I have preferred to bet on myself.
That is why I am rethinking and revisiting the MetLife rates. It seems I can do much better.

Wealthadvisor's avatar

If you do not buy the term policy, and invest the premium dollars in something else, there is no lost opportunity cost on the life insurance because you do not own the policy. If you buy the term, you get no return on your premium, (the insurance company does, but you don’t, hence the LOC of $37,717.) Then the loss of the death benefit, ($100,000.)

There is, however, a lost opportunity cost on your investment. It is the LOC on tax. If you buy the index fund, you will get a better return than 4%, but if you buy the term and invest the difference, you can not just calculate the return on the investment. You must also calculate the cost of the term and the investment to come up with the correct net return. To many life agents keep the two pots separate. Term in one pot and the investment in the other. But when they show the comparison against permanent insurance, they combine the cash value of the policy, (mortality and return on the money and then show how the BTITD works better. In reality, it does not.

I have sat down with clients that have told me they are comfortable set financially, and they are. But when I show them how just doing a few things differently 20 or 30 years ago creates an additional one to two million dollars of extra wealth today, they are shocked. That is because there is so much lost opportunity cost in the mortgage, the IRA and 401(k), the CD in the bank, their life insurance choice, how they funded auto and home owners insurance, it is like trying to keep a bucket full with a hole in the bottom. Unless you patch that hole, the bucket will never remain full. Our money works the same way.

Here is a simple example of loss wealth. You get a new job that offers a 401(k). When you first start working you may be in the 15% bracket. As you advance, you income increases, and your bracket starts to move upward. Years later you are in the 25% tax bracket. You are also buying the company’s group term. You put the maximum in the 401(k) each year and get the match.

You have done a good job with the 401(k) and other investments. You have retired, the group term has gone away, and you are ready to enjoy retirement. Suddenly you have a major medical emergency in the family that forces you to tap the 401(k) in rather large chunks. Suddenly you find that you are in the 28% bracket or 33% for a year or two. You must pay tax on the 401(k). So money that was put in at 15% is now coming out at 28%. You are now paying 13% more in tax than the government gave you credit for. Plus you also have lost all that LOC on the group term.

What if you had put only 7% of income into a 401(k) and put the rest in a good low tax, low load fund. And instead of buying the group term at work, (first $50,000 is paid by the employer,) or the 20 year term, you took some of the dividends from the investment and used those dollars to supplement premiums into a life policy, (a mix of term and permanent,) Now you are flat taxing the investment, lowering your taxes, and at retirement the insurance is using the dividends to pay premium. Now when that medical emergency comes and you need to tap into the investment, you have asset insurance to replace the used funds.

You mention you can afford to take the risk. If that is the case, think about self insuring your home, car, and health insurance. We never have enough money to cover the risk. In Financial planning there are six parts of your plan that must work together. Cash management, taxes, risk management, investment planning, retirement planning and estate planning. If they are not coordinated, you will experience tremendous loss of wealth. Most people are not aware of the loss, because they keep looking at each part separately, not as whole.

If you have any more questions, or want more examples, just let me know.

LuckyGuy's avatar

You see it the way I see it.
One question… Can I give you more than 1 GA? Thanks!

Wealthadvisor's avatar

I don’t think you can vote more than once. But I appreciate the thought. Hope you now have a better understanding of LOC in our everyday lives. It really can contract wealth over time.

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