While I was in college, I spent a year and a half as an intern with a large life insurance company. But rather than getting coffee and filing paperwork for the insurance agents in the office, I was one of them.
I learned all about different types of life insurance and sold policies to several friends, family members, and strangers. I also learned firsthand that many consumers don’t trust insurance agents, even if they haven’t known or worked with them. In fact, only 18% of salespeople are trusted and respected by consumers, according to a report by the Harvard Business Review.
Most importantly, I learned that some life insurance agents do try to oversell to pad their pockets. To help you avoid overpaying or being taken advantage of, here are the top five questions you should ask an insurance agent before buying a policy.
1. Are you an independent or captive agent?
There are two types of insurance agents, and choosing the wrong one could cost you. Here’s a short definition of each kind:
- Independent agent: This kind of agent doesn’t work for a specific insurance company. Instead, an independent agent acts as a broker and works with several insurance companies.
- Captive agent: This type of agent works for one insurance company and doesn’t sell policies from other companies.
Working with independent agents is better in almost every scenario because they have the ability to help you shop around and compare policies from several top insurance companies.
A captive agent, on the other hand, can offer you policies only from one insurer. So you won’t know if it’s the cheapest policy available or even the best for your specific situation, because you won’t be offered alternatives with which to compare it.
“Some companies are more lenient than others on certain health issues, or travels outside the U.S., or smoking cigars,” said Chris Huntley, the president of Huntley Wealth Insurance Services. “In each case, you want your agent to be able to take you to the company that will be the most lenient when it comes to underwriting, as that will lead to better rates.”
2. How do you make money?
Life insurance agents generally work entirely on commission, which means they’re incentivized to upsell policies. The commission can vary by company, but it’s based usually on a percentage of the annual premium.
For example, the company I worked for paid me 50% of the annual premium for each policy I sold upfront, and then a smaller percentage — say, 1% to 4% — over the next 10 years.
So the bigger the policy, the more money the agent makes. It’s no surprise that market research firm LIMRA found that permanent life insurance, which includes whole and universal life policies, makes up 73% of the life insurance market.
Permanent life insurance costs much more than term life insurance, and it can be a good product only in rare circumstances.
If a life insurance agent dodges this question about making money or you don’t have a good feeling about the answer, it might be time to move on to the next agent.
3. How do you determine my needs?
The main goal when buying life insurance is to get as much coverage as you need for as little money as possible. But determining that need can be tricky. Some personal finance experts recommend that you get enough to cover 10 to 20 times your income — and some life insurance agents might agree with that.
However, by using a rule of thumb instead of considering your actual needs, you might end up getting more or less coverage than your loved ones require.
“Determining the right amount of coverage can be tricky since needs vary so much for buying life insurance,” said Huntley. “You might buy life insurance for business protection, estate planning reasons, or to cover final expenses. Every case is unique, and you should speak to a qualified, independent agent about your needs.”
Find an agent using the needs-based approach. Then start the process by adding all the things your loved ones might need to get covered, such as:
- Burial and other final expenses
- Income replacement (you decide the number of years)
- Savings goals, including college and retirement savings
Next, subtract the amount you currently have in liquid assets, including nonretirement investments, savings, and other assets you can turn into cash easily without penalties. These are assets your family can use to cover some of their costs when you pass away.
Go through this process with the insurance agent so that you can verify the accuracy of the final number.
4. What extras do I get with the policy?
Many life insurance companies offer riders, which are extra benefits on policies. There are several types of life insurance riders — depending on the insurer, some riders are free while others cost extra. Examples include:
- Conversion rider: This allows you to convert a term policy to a permanent policy without having to prove that you still are insurable. It’s a good rider to have in case you develop a health condition that could make it hard to get coverage again once your current policy’s term is up.
- Guaranteed insurability rider: This rider allows you to buy additional coverage at predetermined intervals without having to prove your insurability.
- Waiver of premium rider: If you become permanently disabled, the insurance company will keep your policy in force without requiring further premium payments.
- Accelerated death benefit rider: If you’re diagnosed with a terminal illness and have less than 12 to 24 months left to live, this rider allows you to access a portion of your policy’s death benefit to pay for immediate medical costs.
If the policy offered to you doesn’t come with any of these or other riders even for an additional charge, it might be worth shopping around a little more until you find an insurer that offers what you need.
5. Can you explain this to me?
Life insurance policies can be extraordinarily complex, so you shouldn’t be embarrassed if you’re having trouble understanding something. Part of the insurance agent’s job is to give you a basic understanding of life insurance, how it works, the different types of policies, and which is best for you. A good agent should be more than happy to help you understand a confusing concept or tricky term.
For example, if an agent is pushing whole life insurance as an alternative investment option, don’t be afraid to ask how it compares to other top investing options. (Spoiler alert: The rate of return on a whole life policy is much lower.)
If the agent is trying to rush you into filling out an application or promises to explain things better at a later time, then recognize the red flags and consider going to another agent.
There are plenty of good life insurance agents
When I sold life insurance, I prided myself on my determination to put my clients first. I took as much time as they needed to talk about what they were getting themselves into before buying. I wanted them to feel like they could make an educated decision but didn’t press them when they decided a policy didn’t fit in with their budget or if weren’t ready to buy.
I wasn’t the only one doing that, though. I met several insurance agents who took a similar approach. There are good insurance agents out there, and taking the time to find one is more than worth it. They’ll not only help you score lower rates but also educate you so that you can feel confident in your decision to buy coverage.
Interested in refinancing student loans?Here are the top 8 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
6 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
7 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.
8 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
|1.99% – 6.89%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|2.06% – 6.81%3||Undergrad & Graduate|
|2.62% – 6.12%4||Undergrad & Graduate|
|1.99% – 6.65%5||Undergrad & Graduate|
|1.99% – 7.06%6||Undergrad & Graduate|
|1.85% – 6.13%7||Undergrad & Graduate|
|1.90% – 8.59%8||Undergrad & Graduate|