I just placed a policy in force for a gentleman who needed $2,000,000 of life insurance for a buy-sell agreement. He’s a 38 year old cigarette smoker who told me he was quitting smoking. He was also recently diagnosed with Guillain Barre Syndrome (GBS), a disease that can be serious, and his treatment for the GBS only ended seven months prior.
Daily cigarette smokers always pay significantly more than non-smokers anyway. If you add a health issue on top of the smoking, as well as considering he was 5’ 10” and 225 pounds, I had to research the best rates and insurance companies for him.
He and his business partner wanted a 20 year term plan on each of them, so I inquired with all of the best 20 year term companies. The best $2 million tobacco rate available to my client, who was quitting smoking and had the other issues mentioned above, had annual cost of $6,695. This was significantly more than they had budgeted to pay for life insurance. I also offered the best 10 year term, which was $3,800 per year. It was still more than double the cost of what his business partner would pay, and they really didn’t want to pay that much.
This gentleman was adamant that he’s quitting smoking, so I quoted him the best one year term rate (also known as an annual renewable term) for $2 million, which cost $1,320 this year. My client and his partner really liked this rate even though it increased in cost each year. Their intent was to replace this policy with a better rate after he had quit smoking and using any nicotine based products for 12 consecutive months.
The best one year term rate was from American National Life, but an underwriter from the company told me that if the person to be insured still had any symptoms whatsoever from the Guillain Barre syndrome that they would decline this man. My client told me he still had a little numbness/tingling in his fingers and toes, but I believed this was from nerve damage caused by the GBS which may never go away, so I did not consider this an actual symptom.
Met Life and Pacific Life offered the next best one year term rates, but Met Life requires a medical re-approval each year that a policy is renewed. That was too inconvenient for my client, and Pacific Life’s policy was like American National’s and would just automatically renew each year at a higher rate without requiring a new medical or proof of continued good health.
The Pacific Life underwriter told me they’d offer a rate of $2,560 this year. This rate was almost double the cost of American National’s rate but still significantly better than even the 10 year term rate of $3,800.
I had my client apply to both American National and Pacific Life, as there’s never any guarantee that a specific rate will actually be offered. I wrote letters to the underwriters at both companies in my attempt to summarize this man’s GBS and other health history. Moreover, I indicated how he just quit smoking and how the client felt he was fully recovered and back to 100% strength from the GBS, and American National agreed to offer the better rate of $1,320 this year since my client’s exam results were decent.
Below are the guaranteed premiums over the next 10 years that American National Life offered.
Year 1: $1,320
Year 2: $1,640
Year 3: $1,980
Year 4: $2,260
Year 5: $2,580
Year 6: $3,000
Year 7: $3,540
Year 8: $4,140
Year 9: $4,700
Over 10 years, this American National $2,000,000 policy will cost $30,380.
Remember also that the best 10 year guaranteed level term rate available was $3,800 per year or $38,000 over the 10 years.
The American National Life rates above are surprisingly competitive. I told my client that as long as he was still not using tobacco/nicotine this coming November, has not used any in the previous 12 months, and his health is still good otherwise, we’ll have him re-apply for the best 20 year term rate available to him then, which could cost about $1,600 (or about $5,000 less than the best 20 year term rate while he was still a smoker).
But if he is still smoking or has had any negative change in his health, either of which could preclude him from getting a better rate, American National Life offers an awesome opportunity to automatically convert or extend his policy to a 20 or 30 year term plan in the first three policy years or convert to a permanent life insurance policy for first 10 policy years without him having to show any evidence of continued good health. This is the perfect way to lock into a longer guaranteed level rate if my client cannot qualify for a new, better rate later.
I rarely consider or even mention one year term insurance to anyone unless they have a very short term need for life insurance. I was actually surprised at how competitive American National’s one year term rate was compared to all of the competition, even over a five and ten year period. This could be a very good option for anyone who needs life insurance and smokes but intends to quit or who just recently quit smoking. It’s also a great incentive to continue to not smoke, as a much better rate may be available as soon as you’re 12 months nicotine free!
If you need life insurance and recently stopped or intend to stop smoking, or if you only have a short term need for life insurance, simply click on the link below to get an accurate quote. You can also call me at 1-800-380-3533 and ask for G3 or email me at [email protected].