Cost-saving "No Load" Term Life Insurance??

May 26, 2016

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Can you point me, right now, to "no-load" term life policy that will result in savings for

  1. Yes (provide link, please)

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  2. No

    4 vote(s)
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  1. MichaelBurton
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    MichaelBurton Super Genius

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    The question got cut off. It should read,

    "Can you point me, right now, to a "no load" term life insurance policy that will (by virtue of paying no commissions) result in cost-savings for the buyer?"

    So, have any of you ever spotted this mythical creature?

    I know the no-load policy exists in permanent insurance and does help consumers (on early liquidity, especially). I have even helped place a handful of these contracts.

    This is not about permanent policies. This is about TERM POLICIES, ONLY!

    But for term life insurance, I've never found a no-load policy that resulted in any savings for the client. In fact, companies like TIAA-CREF and USAA (that pat themselves on the back for not paying commissions) are invariably 10-25% more expensive than the most competive, full-rip term policies (from highly rated carriers) out there.

    Still, I see this mythical beast referenced from time to time in articles, blogs, comments, and posts on consumer blogs. When I ask for details, there are never any meaningful replies, or incorrect ones . . . which probably tells the story.

    Nevertheless, if you've spotted this Unicorn, please let me know and tell me where I might find it. I have written one article on this already and I'm working on a presentation right now related to it. I want to be sure I'm not missing something.

    Thanks for your help.
     
    Last edited: May 26, 2016
  2. Cash
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    Cash Guru

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    Yeah it doesn't exist. It is just a way for the weirdos on PF blogs and forums to talk about and FEEL better about themselves.

    An agent is just a distribution system. These people have no idea how businesses work.
     
    Cash, May 26, 2016
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  3. DHK
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    DHK Guru

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    "Loads" are charged against an investment component.

    Term insurance has no investment component.

    If you call insurance companies and ask for a policy direct from them versus from an agent (thinking you'll save on the commission), you'll be quoted the exact same premiums for the policy.
     
    DHK, May 26, 2016
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  4. MichaelBurton
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    MichaelBurton Super Genius

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    How long have you been selling, DHK. Have you tried this? Just curious for the sake of my article.
     
  5. Ami
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    Ami Expert

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    I concur with DHK. Cash is also right on the money (pun not intended). There are distribution (marketing and processing) costs regardless of whether the "marketing" is expended by way of sales commissions - divvied up within the sales pyramid of company marketing execs, marketing reps, MGAs, AGAs, and the base of the pyramid, the agent - or otherwise.

    "Direct" sold term insurance (as well as perm), logically, requires an extra margin of safety relating to risk assumed by the insurer since the "field u/w" filtering is absent in the picture. Moreover, "direct" sold life insurance often is available with a lower max cap on face amounts. Hence the often higher pricing for "direct" sold life insurance.

    From the most important perspective - the consumer's best interests - I tend to view the "direct" sold "underwritten" (ie other than real Guaranteed Issue) policies as indicating approval for payment of premiums upon contract issue. Whether coverage actually exists on such remains to be determined in the even of a claim.

    Also, let's keep in mind that there is an extra margin of profit for the insurer in "direct" sold life insurance policies. As there is no agent involved who may remind beneficiaries or executors of the existence of the policy, a valid claim that would have been covered if made is potentially avoided.
     
    Ami, May 27, 2016
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  6. DHK
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    I've been selling annuities since 2005 and life insurance since 2008.

    Have I ever done this? No... but it's not like they have separate illustration software for the home office. (Sometimes they can't even keep the one system operating well, right?)

    Otherwise agents would be competing with the home office for sales. Now, sometimes that's true with some companies that "sell direct", but they usually have a different product line for those sales. (I try to help make sure that I'm not representing companies where their home office would compete against me too.)
     
    DHK, May 27, 2016
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  7. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    You can look up rate filings with the state DOI. The carriers that sell both via agents and direct do not file separate rate schedules. It is all the same price, no matter what method you choose to purchase it.

    And DHK is correct about Loads as well. Loads are on investments. There is sometimes a Policy Fee that is shown as a separate expense above the Premium... but the illustration system includes any policy fees in the Premium it quotes... and Policy Fees are charged even if bought direct.
     
    scagnt83, May 27, 2016
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  8. MichaelBurton
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    MichaelBurton Super Genius

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    Well, just for grins and for my article, I went ahead and tried to get a quote from AIG "Direct." Couldn't get one online (even though the site makes it seem like you could). Had to call. I tried to tell the sales guy on the phone that I was just an agent/author doing some research. Asked for the numbers. Nope, he made me go through the whole drill. He even wanted to tell me all about American General AFTER I told him I have sold it for over a decade.

    Got to the end, and after all that . . . it was just the same American General coverage any broker can write. Exact same price.

    I asked him why it wasn't cheaper if it was direct. He said, and I quote, "Are you kidding? You know how the regulators work. We can't change this, or have one price here and another there. This stuff is set in stone."

    LOL. Pure gold for my article.

    ----------

    Yes, that's a helpful distinction. Thank you to both you and DHK! I was using the term too loosely. Load does not = commission. But . . . it's close!
     
  9. pfg1
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    That's good stuff right there :D:D
     
    pfg1, May 27, 2016
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  10. MichaelBurton
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    MichaelBurton Super Genius

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    Oh, gosh, I totally forgot this gem, too:

    "Man, this isn't like real estate. We can't back out the commissions."

    I kid you not. Pure gold!
     
    Last edited: May 30, 2016
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