Term4Sale Improves Term Insurance Comparisons for Consumers

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Term4Sale, Inc. has recently introduced new comparison features to its http://www.term4sale.com website. Consumers have two new options for comparing term life insurance policies.

http://www.term4sale.com now lets a consumer instantly compare the lowest cost level term insurance products for multiple categories at the same time. Before this a consumer would have to compare one category at a time. With the new option the consumer can select a 10 versus a 20 year comparison where they will see the lowest priced 10 year products followed by the lowest priced 20 year products all on the same page.

Term4Sale, Inc. president Bob Barney said, "Many consumers don't appreciate the difference between a 10 and 20 year level term policy. Our new comparison makes it much easier for the consumer to understand those differences."

The second new option makes it easy to see the year by year difference in cost between those lowest priced 10 and 20 year products. By clicking a single button the consumer can display a side-by-side spreadsheet comparison of the 6 least expensive products. In the case of the 10 versus 20 year term comparison, the first 3 products in the spreadsheet are the 3 lowest priced 10 year products followed by the 3 lowest priced 20 year policies.

The spreadsheet gives accumulated premium costs at 5 year intervals. This allows the consumer to see how much more they would pay for a 20 year policy for the first 10 years but how much they would save after that.

http://www.term4sale.com offers a variety of multiple category comparisons allowing consumers to compare a variety of different level term period combinations. If a consumer wants, they can compare a total of 6 different level term categories on the same page.

As background a 10 year level term policy offers a premium which remains level for 10 years. At the end of 10 years most 10 year level premium policies permit a consumer to continue to buy the life insurance but the premiums beginning in year 11 are substantially higher. By contrast a 20 year level term policy starts off more expensive than a 10 year policy but the premiums continue level for the full 20 years.

Future premiums for level term life insurance policies, often referred to as renewal premiums, increase because the risk of death increases with age. The initial level period, whether 10, 20 or 30 years, lets the consumer choose how much time iwill pass before the increases kick in. The longer the level period, the higher the level premium.

Barney stressed, "Most consumers should match the level period to the time they will need the insurance. Most people need term insurance until they retire and stop working. A 45 year old should be looking at term insurance for 20 years. A person who is 35 should probably buy a 30 year policy. While the initial costs for these products are higher than a shorter level term period the consumer avoids renewal premiums which can skyrocket out of sight."

Some consumer advocates disagree with Barney and suggest that consumers buy cheaper 10 year products and then shop for new 10 year term at the end of 10 years. While that theoretically could save over paying the renewal premiums the problem is whether the consumer's health will permit that new purchase in 10 years.

The future health of a consumer does not affect the renewal premiums guaranteed in an existing term policy. On the other hand, to buy a new policy the consumer must prove they are still healthy.

Barney explained, "That's why most term products have very high renewal costs. Companies know that if a consumer is healthy they will likely buy a new policy when the premiums start going up. Consumers who have developed health problems will not be able to buy the new policy and so they will hang on to their old policy. Given that, companies can fully expect that a consumer electing to pay renewal premiums has a much higher likelihood of death. Because of this, renewal premiums have to be higher to protect the company against the anticipated increased level of claims."

While 20 and 30 year policies have higher initial premiums they offer much lower overall cost. A life company knows that a consumer who buys a 20 year policy is much more likely to keep that policy past the point they might consider dropping a 10 year policy. Barney said, "Most consumers will think about switching when the premiums go up. If the company can keep a 20 or 30 year term customer longer it can moderate the total cost for the longer level period."

Regardless of how long a consumer has had a level term policy, Barney said it never hurts to check and compare term insurance costs. While a life company cannot walk away from the guaranteed premiums it has put in an existing policy, consumers can walk away from the term policy at any time without penalty. If a consumer can find a better deal, or buy a longer level term period for a small difference in premium, they would be well advised to consider doing so. Price differences between companies are substantial. In many cases a new policy will save the consumer a lot of money over an existing policy.

Barney warned, "Never give up an old term policy until you have a new term policy in hand and the first premium on the new policy has been paid. During the medical exam, the company could turn up a medical problem you didn't know you had." Barney suggested that a one month overlap makes sense and should ensure a person is not inadvertently left without insurance.

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Robert Barney
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