Life Insurance Actuary's Guide to
Term Life Insurance Quote Sites*
|by Norlyn Dimmitt, FSA, Founder of ExamFirst
In this article I compare the three term life insurance
quote sites with the most accurate term life insurance quotes
InsureMarket.com) on four criteria
-- quote accuracy, carrier selection, misquote handling, and website ease
of use. InsuranceGuide. wins
hands down on all four criteria.
The two most important criteria (the criteria which will lead term
life insurance buyers to the policy that is best for them)
(1) Quoting accuracy
(2) Carrier selection
Quoting accuracy is the degree that term life insurance quotes
are geared to your actual risk profile. But accurate term life insurance
quotes without carrier selection (i.e.., a number of competitive term life
insurance companies) will still leave you wondering if there isn't a
significantly better term life insurance policy for you out there.
Other important criteria are:
(3) Misquote handling
Even with the most accurate quoting systems, misquotes occur (because
you often don't know your cholesterol level or ratio, or any number of other
exam results in advance -- what a backward system!)
If you end up not qualifying for the rate you were initially quoted,
and discover a better rate with another company (by rerunning a quote armed
with your exam results), you will want to be sure that you don't have to
start all over with a new agent. This is a good reason to work with a broker
who works with many companies, rather than an agent that only represents
one or two.
4) Ease of use
Don't be misled by quote systems that only ask age, sex, and smoker
status before quoting you. The fact is, a lot of risk variables are considered
by companies, and if you are serious about buying a policy, then you may
as well answer the most important health questions up front (and get as accurate
a quote as possible).
The above four criteria are the ones I focus on when comparing the three
most accurate quoting sites that I've encountered thus far --
Rather than inundate the reader with a detailed discussion of the
myriad underwriting variables that are looked at when classifying risk, I'm
going to confine myself to the 5 variables that come into play most often,
for term buyers who are standard or better. These variables are:
(1) Build (Height/weight)
(2) Cholesterol (Level/ratio; medication)
(3) Blood Pressure (systolic/diastolic; meds)
(4) Family History
(5) Driving record
No current online quote system works well for substandard or impaired risk
cases (even impaired risks like asthma or controlled diabetes that are standard
in many cases). A lot of the questions that all three sites under review
ask are geared to throwing out cases that require individual attention (each
has a long list of impairments from epilepsy to hypertension, none of which
I will discuss).
All three sites include build (height/weight) in their calculations, so there
is nothing to compare. However, it is worth noting that 15% of all misquotes
are a result of incorrectly entered height/weight information. Many people
underestimate their weight -- what matters here, as with all exam results,
is what the paramedical examiner and laboratory say. This is a very important
point in my larger enterprise, because it calls attention to the great value
of allowing life insurance applicants to be examined BEFORE they get quoted.
This is the ONLY way to assure that they are selecting the right company
and policy for their risk profile.
Cholesterol is the risk factor that causes 37% of all misquotes
(according to one medium-scale study.) Clearly getting this risk factor right
is very important for accurate quoting. Getting the cholestrol factor right
means asking about cholestrol level, colestrol ratio and about treatment
InsWeb asks only about cholesterol
level, ignoring cholesterol ratio. But the only time they are asked about
cholesterol level is when the applicant admits to treatment or diagnosis
in a section that most people don't read carefully especially if they consider
InsureMarket, like InsWeb,
asks only for cholesterol level, ignoring ratio. (The John Doe example on
the previous page clearly showed how important cholestrol ratio is.) Unlike
InsWeb, InsureMarket doesn't ask a question about treatment or
The rationale I've heard from representatives at both companies
is that "no one knows the ratio and/or level". This is increasingly incorrect
(more and more people can in fact enter a number here, and even if official
insurance exam results may differ, an actual past reading is more accurate
than no reading at all). Moreover, it is highly relevant to customers, after
examination, to be able to requote themselves if their cholesterol level
or ratio exceeds the limits on the originally applied-for quote.
Only InsuranceGuide asks
all the relevant questions on cholesterol -- level, ratio, and
treatment/diagnosis. It is therefore the only one of my top 3 picks that
has complete cholesterol quoting (and requoting) capability.
[Requote capability is a theme I repeat ad nauseum in my writings, because
even in the currently obsolete term delivery system, requote capability still
empowers the customer. Few customers will trust the agent who encourages
them to accept the higher rate offered by a carrier, when he insists that
"that's the best you can do". This tendency to try and resell a misquoted
case with the same carrier (to avoid the admittedly tedious task of applying
elsewhere) is one of the most salient symptoms in an obsolete system, and
everyone loses when half of all misquoted customers walk away in disgust.
The original company will in fact still be the best rate in many cases, and
customers may pick convenience over price in many other cases, but I believe
emphatically that it should be the customers choice!]
As with Cholesterol, InsWeb only asks
for blood pressure if the applicant has answered "yes" to the general
treatment/diagnosis question on blood pressure.
InsureMarket does a commendable
job here, asking not only about treatment/diagnosis, but asking for particulars
on systolic/diastolic readings. The only slight criticism I have, is that
the menu input for systolic/diastolic pressure is in five point increments,
and in fact many carriers have limits for risk classes that are not rounded
to the nearest five.
InsuranceGuide again takes
top prize (if not so decisively as it did on the cholesterol variable). InsuranceGuide
asks about treatment/diagnosis, and allows exact systolic/diastolic numbers
to be input.
FAMILY HISTORY and DRIVING RECORD
All three sites address these, and evaluation of each site's treatment is
a bit difficult to communicate without going into cumbersome detail. Suffice
it to say that companies treat these items rather differently, and
InsuranceGuide does the best
job, once again, at covering the terrain. The impact of the differences between
the sites, in terms of overall accuracy, is much less significant here than
with cholesterol, so I don't want to overanalyze these variables.
I'll simply point out two examples. First, companies use different age cut
points in family history (60 is most common, but 50 and 70 are also used).
InsuranceGuide is the only site that covers each cut point. Secondly, moving violations
are analyzed over different time periods (1, 2, 3 years) and with different
limits (1, 2 or 3 violations in the time period). Again, InsuranceGuide covers
the terrain most completely.
To summarize, on criteria #1, quote accuracy,
InsuranceGuide is overwhelmingly
superior, taking top honors on each of the most salient five underwriting
Any attempt to list the fifteen most competitive term companies
is going to be challenged. Here is my clearly imperfect (but unbiased) list
(in alphabetical order), followed by a brief discussion of how I derived
1. Banner Life
3. Empire General
4. First Colony
5. First Penn
6. ING Direct
7. John Hancock
9. North American
10. Ohio National
11. Old Republic
13. West Coast
14. Western Southern
15. Zurich Kemper
InsuranceGuide: 6 companies (1, 3, 4, 5, 12, 13)
InsWeb: 10 companies (2, 4, 6, 7, 8, 9, 10, 11, 14, 15)
InsureMarket: 8 companies (2, 6, 7, 8, 10, 12, 14, 15)
On my imperfect (but again, unbiased) sampling of top carriers, all three
websites offer an incomplete, but complementary and reasonably broad selection
of competitive companies.
Now for my selection criteria. I primarily used
Term4sale.com to derive my top 15
list. It is the most unbiased, comprehensive online quote site (Bob Barney
doesn't sell policies OR leads). I added ING Direct, which is exceptionally
competitive but which doesn't show up on Term4sale.com.
I sacrificed perfection for ease of replication. I want readers to be able
to verify my analysis for themselves, without having it take all day. To
that end, I focused entirely on the top preferred class.
While an accurate top ten would run a comprehensive sample of actual risk
profiles through an accurate quote engine which had all companies, there
is no such accurate quote system. And since criteria for less-than-best preferred
classes vary widely, the only meaningful way to derive top carriers was to
stick to the top class, "preferred plus". I realize that this is flawed --
I miss several companies that are very competitive for some risk profiles.
But at the same time, it is unbiased (i.e., if you were able to flesh out
my list, there is no logical reason to think that it would change my conclusion
about InsuranceGuide having much better carrier
Anyway, the demographic cells were as follows:
Male and female (equal representation)
Smoker and Nonsmoker classes
Ages 35, 45, 55
duration 10, 15, 20, 30 (omitted 30 year for age 55)
Face amount: $500,000
I assigned scores of 5, 4, 3, 2, and 1 to the top 5 rankings in each
If a term buyer ends up discovering for the first time that he
or she has a high cholesterol level, and can qualify for a better rate with
a different company, neither InsWeb nor InsureMarket will be able to handle
the switch smoothly. That's because their relationships are primarily with
direct fulfillment centers tied to specific companies. (Eg., an agent working
exclusively for John Hancock has no incentive to move a client to another
carrier). InsWeb and
InsureMarket are not integrated,
full service brokers.
InsuranceGuide is, and that
would be a good reason to go through them, even apart from their clear
superiority in quote accuracy and carrier selection.
Ease of use
Because InsWeb and InsureMarket invoke more graphics, and force
the prospective term buyer to click through multiple pages, it takes 3 to
4 times as long to get a quote (on a 28.8 bps line, which is still prevalent),
as compared to InsuranceGuide's no-nonsense, simple form.
displays all choices (5,10,15,20, and 30 year), whereas with
InsureMarket, one has to run 5
quotes to get that choice matrix. Enough said.
On each of the above criteria,
a superiority to InsWeb and
InsureMarket that belies the fact
that InsuranceGuide's technology budget is relatively minuscule, in comparison
to its well capitalized competitors. It seems that there is something to
be said for having a deep grasp of the current term life insurance delivery
process (warts and all), which David Phillips clearly does.
No informed person doubts any longer that the internet will revolutionize
the way we do business. Nowhere is this more true than in the delivery of
term life insurance.
In the not too distant future, term buyers will take their exam first, and
then run the results through the full blown expert underwriting modules of
numerous carriers. In a sense, they will bid their risk profiles out to
competitive term companies, and choose from the offers that are returned.
Such online customer empowerment is already being implemented for other financial
services (eg., mortgage loans and automobile insurance).
But other financial services don't require a fundamental paradigm shift --
to empower term buyers, companies must relinquish significant control over
the underwriting process, and they will do so only when it becomes economically
infeasible to cling any longer to an obsolete system. That day is not far
* EDITOR'S NOTE: Some of the web sites chronicled here no longer exist. We maintain this article for its historical value.
You can find a more recent site for life insurance quotes here.
Another site, useful for researching life insurance companies is