No doubt you’ve seen commercials on television offering guaranteed-issue whole life insurance for the low, low price of $9.95 a month……regardless of health!
If you think this sounds too good to be true, you would be correct. I’ve had several clients over the years ask me about these commercials, and after seeing yet another on TV this morning I figured it was time to publish the truth about it.
The advertised $9.95 a month would buy you one unit of life insurance. So what is a unit? A unit is simply a death benefit amount that is determined by your current age, gender, and the state in which you reside in. Looking at the offered plan I saw on TV this morning, for a 50 year old male living in Ohio – one “unit” would buy $1,786 in death benefit. This particular company allows you to buy anywhere between 1 unit up to 12 units. If you purchased the maximum of 12 units, that would provide you $21,432 in life insurance at a cost of $119.40 per month. That annual cost comes to $1,432.80!
To make matters worse, if you die within the first 2 years of the policy – your beneficiaries do not get the life insurance benefit. Instead, the insurance company only returns the premium paid plus interest to them.
Let’s compare this to a random, standard whole life illustration from one of our highly rated life insurance companies. With this particular company, the minimum life insurance limit would be $25,000. If you were to have the billing set up for a lifetime (like the example above), your monthly rate would be $41.41 for a healthy 50 year old male. Or an annual cost of $476.00. The photo below shows other billing schedules if you want to fully fund the policy much sooner.
As you can see, the advertised $9.95 a month plans aren’t exactly a good deal when you get to the fine print.
Don’t go it alone, if you have any questions or are interested in life insurance please call us at Beck Insurance Agency at 419-446-2777, email us at firstname.lastname@example.org, or click here.
Joseph D. Beck, CIC, CPRM, President