There are many ways a Life Insurance broker can add value in helping to determine your insurance needs and finding the right product for you. One of the main benefits of working with a broker rather than an agent from one specific company is that a broker will examine the market to find the best overall solution to meet your needs. This may include searching the market for desirable product features and including policies from different insurers, usually resulting in cost savings.
Jonathan Weinstein, one of our Insurance Advisors at TriDelta Financial, gives a good example of how one can benefit by working with a life insurance broker:
“I worked on a solution for a client recently – the client was a 35 year old female who was looking for permanent life insurance and critical illness (CI) insurance (CI is a plan that pays a tax free lump sum living benefit in the event of certain catastrophic health issues – e.g. heart attack, stroke). She was interested in paying off her premiums during her working years with coverage in force for life, so I looked into some 20-pay plans for her (i.e. policies with a level premium cost for a 20 year period at which time no further payments are required and the policyholder remains covered). Based on a needs analysis I determined she required $300,000 in life insurance and $100,000 in Critical Illness insurance.
For the life policy I found a 20-pay Universal Life plan with a cost of $160/month. For the Critical Illness policy I looked at 20-pay plans that included a Return of Premium (ROP) on Death rider. This is a policy that is paid up after 20 years, with CI protection for life, and with this rider if a claim is never made the insurance company will return all premiums paid to the insured’s estate (after 20 years the insurer will also return all premiums paid upon surrender of the policy; if surrender is exercised coverage is no longer in force). The total monthly premium cost for this plan was $128, or about $30,000 over 20 years (so in essence, in addition to the CI protection, given that all premiums will be returned upon death with the ROP feature, the client was purchasing an additional $30,000 in Life Insurance). The total monthly premiums for the two policies were $288.
I then however, looked at one company’s CI plan which included a great feature – rather than choosing the ROP rider, this insurer offers a life insurance rider – in the event of death with no CI claim having been made, they will pay the full face value of the policy (in this case $100,000) rather than just returning the premiums ($30,000 as noted above). So I calculated the premiums by choosing this rider and reducing the Universal Life Insurance plan to $230,000 from $300,000 (as the new CI plan chosen was providing an additional $70,000 in life insurance).
The resulting total monthly premium costs were $273! The client is saving $180/year – $3,600 over the 20 year payment period and is getting the same total coverage (with the only caveat being she needs to keep both policies in force). The client was happy with this solution and appreciated the cost savings by structuring it this way.
As a broker I was able to mix and match products from different companies and find unique product features to provide a solution that met the client’s needs and saved her money. If you would like an assessment of your insurance needs to see if you are properly set up or would like to find out about different alternatives please contact us here at TriDelta.”