Term life insurance keeps getting easier to find


THE NEXT TIME you buy term insurance, you might not sit down with a life insurance agent. The commissions are so puny they're rarely worth an agent's power of persuasion.

A new distribution system is developing, with different players and new ways of marketing. Banks and stockbrokerage houses are selling by telephone, mail or Internet. Licensed agents still take your order, but they're voices at the end of a phone.

Increasingly, agents who give personal service will be focusing on the well-to-do, who buy high-commission cash-value policies for investment, business and estate planning.

Term coverage, by contrast, will be mass-marketed to middle-income families. You'll have to take the initiative to buy coverage yourself.

The new competition, however, should help you get a better deal. Price-quote services are proliferating. They search a term-policy database to find the best price for someone of your age and health.

Once you've picked a policy, a medic drops by, to draw some blood, take a urine sample and check your general health. The rest of the sale is accomplished by phone, fax and mail.

If you told the quote service that you're in excellent health, but the medic picks up a problem, you'll be asked to pay more than you were originally quoted.

In that case, you should shop again. Tell the quote service you're a "standard" rate rather than "preferred." Another insurer may offer you a better price.

Two discount brokerage firms are selling aggressively in all 50 states.

Charles Schwab & Co. sells a 10-year low-load policy underwritten by Great-West Life ("low load" means that no sales commissions are built into the price). For information, call 800-542-LIFE.

Jack White & Co. lets you shop a database of 350 insurers, including the low loads (call 800-622-3699). Thanks to a raging price war, customers in superfine health may find that, for them, load policies cost the least, despite the fact that they're paying a sales commission.

If your health is just a hair less than perfect, however, you generally won't qualify for that extra-low price. For this group of buyers, Jack White offers special policies from Midland Life Insurance Co., with terms of 5, 10, 15 or 20 years. "The rates are lower than those of most preferred policies and more people in general good health will qualify for them," Senior Vice President Mark White told my associate, Kate O'Brien Ahlers.

The banks that are testing this market are licensed in only a few states so far. NationsBank, selling in Maryland, Virginia and Washington, D.C., offers policies from a roster of some 100 term carriers (call toll-free 888-294-2265). First Union deals with about 15 carriers (800-428-9440), and currently sells insurance in California, Georgia, Maryland, North Carolina, New Jersey, South Carolina, Tennessee, Virginia and the District of Columbia.

Quotesmith, with a database of some 143 carriers, provides free term quotes by Internet (www.quotesmith.com) or by phone (800-431-1147). Applicants are initially asked only one health question: Do you use tobacco? If not, you're quoted a preferred rate. After the medical exam, however, the rate may rise.

Insurance Information Inc. (800-472-5800) covers more than 500 carriers, charges $50 for five or more quotes, and asks up to a dozen health questions. So the rate you're quoted is more apt to be the rate you get.

Pub Date: 12/09/96

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