Misleading Life Insurance Ads

 I suppose that I’m more sensitive to this than the average person because I’m in the life insurance business but the commercials and ads touting huge amounts of life insurance for “only $10 a month” really tick me off.

The more media channels there are the more advertising messages we are exposed to. Although many of today’s market researchers have come to accept as common knowledge that the average person in the US is exposed to 5,000 ads and brand messages (could be a label in your pantry, a commercial, a billboard, a text, or an image on a website) per day other research has shown that in a typical day the average person is exposed to about 265 actual ads.       

This presents a huge challenge to all sellers of products and services. In the life insurance industry it also causes problems for well-meaning consumers who are in the market for life insurance. Why? With all of the advertisers clamoring for eyeballs and eardrums life insurance companies are always looking for ways to stand out from the crowd. Being the largely uncreative industry that it is, the typical life insurance company leads with low-price messages. The problem for consumers is that most life insurance companies have as many as 14 different “real” rates for the same policy!

Here’s the way it works:

Life insurance company A, let’s call them Lotsa Money Mutual, offers a $250,000 policy with rates that are locked in for twenty years. They advertise their policy for only $22 per month for a 42-year old male. You bite on the ad, dial the number, decide to apply and six weeks later a policy gets issued…except the rate is $51 per month. Why? Because maybe you’re a little heavy, maybe your father had a coronary before he was 60 years old, maybe you take a medication for gout, maybe you had a couple of traffic tickets. I could go on with “maybe’s” for a few more paragraphs.

What Lotsa Money Mutual never advertises is that they issue policies with 14 different rates and their advertised rates are actually issued to only 7 out of every 100 applicants. But by the time that you’ve gone through the application process and waited six weeks for a policy you’re too worn down to try it again with another insurance company so you just bite the bullet and pay the higher rate. In fact, the insurance companies are counting on you not having the fortitude to start over again with a new insurance company.

Here is an example of a typical life insurance company’s rate categories:

Ultra non-tobacco	Preferred non-tobacco
Standard plus non-tobacco	Standard Non-tobacco
Preferred tobacco	Standard tobacco
Table 1	Table 2
Table 3	Table 4
Table 5	Table 6
Table 7	Table 8

That’s fourteen different rates for the same policy for the same age. Times two because there’s a different table for men and women! That’s right…as many as twenty-eight different rates for a single age. To determine your actual rate the insurance company uses many different factors such as your height and weight, current and past medications, tobacco use, medical history, driving record, family history, income, and many more.

So here’s another shameless commercial. If you are in need of life insurance don’t fall for those teaser ads. Use the services of an independent, professional broker (like us) who represents many insurance companies and, more importantly, who takes the time to write up a detailed personal profile for you so that you get the most accurate quotes possible. That’s really the best way to be assured of getting the best rate for you, not for the guy on the commercial who is 6’ 3” tall, 165 pounds, runs marathons, and doesn’t drink, think impure thoughts, and whose family lived into their hundreds.

Of course, like all of our services, we don’t charge a penny for analyzing the best possible rates from the highest rated insurance companies. We’ll always work hard to earn your trust and to earn your business.

Thanks for reading.

Sincerely,

Alan Leafman, President

(800) 955-0418