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Clifford Said:

are their any guaranteed lowload life insurance co's out there that doesnt increase your premiums?

We Answered:

You can check with Ameritas or TIAA-CREF for low load insurance options.

After you've called them, check with a couple insurance brokers. I have found that "low load" or "no commission" does not always make them more competitive. Sometimes, commissioned just means the insurance company gets to keep less, not that you pay more.

Roberto Said:

What are the differences between guaranteed and non-guaranteed columns on a life insurance policy illustration

We Answered:

Ever since life insurance companies and their agents have been using personal computers to produce policy illustrations, which are now commonly used to show premium rates, cash values, death benefits, etc., these illustrations have been, at best, misunderstood. Worse, they have, all too often, been used (either negligently or intentionally) by agents to create unrealistic expectations in the minds of life insurance buyers. Over the past few years, as policies fail to meet the illustrated performance expectations, we have seen a multitude of lawsuits on behalf of consumers claiming to have been misled.

Who bears the blame for this widespread problem? Is it the insurance companies that distributed the software and encouraged, or at least made it possible for, agents to produce illustrations that could be misunderstood? Is it the agents, who may have used the software but could or should have done a better job explaining how these policies work, and which portions of the illustrations were guaranteed and which were not? Or, is it the consumer, who perhaps should have (a) read the fine print, and (b) known that interest rates probably wouldn’t stay at 11% forever?

It is important to understand that the only promises a life insurance company makes when it sells a product are the contractual guarantees. Policy illustrations are not promises. Rather, they are hypothetical illustrations of what might happen if certain (disclosed and undisclosed) assumptions come true. The fact is, life insurance companies can illustrate any non-guaranteed numbers they want, including non-guaranteed premiums, “vanishing premiums,” cash values, and death benefits. And surprisingly, there is no accountability for the reasonableness of the non-guaranteed assumptions used in policy illustrations.

As a result, comparing policies based on non-guaranteed assumptions has been, and will continue to be, a notoriously unreliable method of determining which policy will actually turn out to be the best value. But consumers want to make “apples to apples” comparisons. So then, what value, if any, do these illustrations have? And how can the consumer intelligently and prudently make a determination regarding the relative merits of various policies being considered?

Policy illustrations can be useful in comparing what each insurance company is willing to contractually guarantee. And, as the old saying goes, “guarantees are only as good as the maker…,” so you should only consider policies offered by insurance companies that are highly rated and financially stable. Many top-rated companies offer outstanding combinations of low prices and strong guarantees. But, be careful. Others charge more, and guarantee less, choosing rather to rely primarily on their financial strength and past history to woo consumers into merely trusting them to deliver long term values.

To avoid the problem of misunderstanding what life insurance policy illustrations mean, follow a few simple guidelines. When comparing level term life policy illustrations, many of which are available with level premiums as long as 30 years, the key questions to ask are:

1. “How long is the illustrated premium absolutely guaranteed?”
2.“Is the coverage convertible to permanent insurance for the entire level term period without evidence of insurability (good health)?”

When comparing permanent (cash value) life insurance policies, including second-to-die and individual plans, the key question to ask is “What is the minimum annual premium necessary to absolutely guarantee the full death benefit forever (to age 100 and beyond)?”

Unless these simple questions can be answered, and backed up through the guaranteed columns on the policy illustrations, and again in the subsequently issued policy, you may be asking for trouble, and setting yourself up for disappointment in the form of unexpected premium increases in the future, or worse, an unexpected lapse in your coverage.

Jo Said:

Is my life insurance company trying to rip me off?

We Answered:

HOLY COW....

A Primerica rep just said:

"You should think about whether you need more coverage or not in the future. If you forfeit now and someday you find out you need more coverage, you will have to provide proof of insurability and the added coverage will be based on your current age."

Why would he ever need more insurance in the future? Won't his "buy completely overpriced term insurance and invest what's left" plan that Primerica set him up with take him all the way to financially independence?

LOL