It’s been 13 years since I got my $1,000,000, 20-year term life insurance policy and I almost forgot about the cumbersome process. After filling out the application material, I had to schedule an appointment to have a medical examiner come over to test my blood pressure, weigh me, ask a series of questions and draw blood. Ugh, I hated the blood draw. The worst is when they miss a vein and have to poke you again.
I had to wait at least a month to see if I got approved, since the insurance company had to wait for my blood results to make sure I didn’t have some random deficiency unknown to them or me. The process was a pain, but I kept thinking about the importance of being a responsible man. I had just taken out a million dollar mortgage and didn’t want to saddle my girlfriend with debt in case of my demise.
I firmly believe the medical checkup is one of the main reasons why people don’t bother getting life insurance or can’t get life insurance because something happens during the process. If only there was a better way.
When SoFi reached out with their value proposition on their new term life insurance offering featuring no medical checkups, I had to learn more. As a good business man, I got them to sponsor this post to pay for my time. All thoughts and opinions are my own.
In the emerging fintech lending world, SoFi is the giant that has raised over $1.5 billion in funding and has lent out over $14 billion in loans since its founding in 2011 by four Stanford business school students. They hypothesized their fellow alumni would be willing to lend future alumni money at lower interest rates to refinance their loans. Their hypothesis has since been proven correct with an accumulation of over 200,000 members.
Fintech is a boon to most consumers because it lowers our borrowing costs. Advancements in underwriting allow lenders to analyze risk much more efficiently. In the past, big banks never considered where you went to school, or whether people with graduate degrees had lower default rates. Now the race is on to lend as efficiently as possible.
Quick Facts About Life Insurance
For those of you with loved ones who depend on your income to maintain their lifestyles, getting life insurance is a worthwhile gift. The benefit is usually paid out tax free and it feels good knowing if the worst happens, you can still provide.
Here are some quick facts you should know about life insurance:
- Only 4 in 10 people surveyed for Life Happens’ 2015 Insurance Barometer Study feel they have sufficient life insurance coverage largely due to cost. Yet, most people overestimate the true cost for term life insurance by several times.
- About 60% of Americans have access to individual or group life insurance through their employer.
- Term life policies offered by employers are typically 1-2 X salary, but 7-10 X salary is the often-recommended policy size.
- According to MetLife’s Employee Benefits Trends study, only 44% of employers offer “portable benefits” to workers who leave.
- With workers aged 25-34 job hopping every ~2.8 years on average, a lot of people lose coverage when they switch employers, according to the Bureau of Labor Statistics.
- About one in three households would have immediate difficulty paying living expenses due to the loss of a primary wage earner, according to Life Happens.
How Is Technology Making Life Insurance Better?
SoFi teamed up with Protective Life Insurance Company in 2016 to offer term life insurance policies. SoFi’s technology and Protective’s long track record as an insurance provider bring some unique, modern-day benefits to the insurance industry. Here are some highlights of their offer:
- Easily access a personalized free quote online in about two minutes.
- If you like what you see, complete the application process in about 20 minutes.
- Policies are offered in 10, 15 and 20 year terms ranging from $100,000 – $5,000,000.
- Bypass medical exams for policies up to $1 million policies for ages 18 – 40 and $500,000 for ages between 41-60 if you meet eligibility requirements.
- Low-cost rates and reliable service.
- Receive and sign your policy as quickly as one business day.
Tip #1 Before you start the application process, you’ll want to have quick access to your annual income, net worth, driver’s license or ID card, contact info of your primary care physician (PCP), current and past medical info for yourself and your family, and any pending or replacement life insurance information.
Tip #2 When determining how much coverage to get, consider these top 5 coverage needs: 1. replacing income, 2. college tuition costs for your children, 3. mortgage payments, 4. elder care for your parents, 5. paying off debt. You can utilize their online calculator to help select a policy size.
Tip #3 Being healthy is not only good for you and your family, it helps you get lower premiums coupled with the potential perk of bypassing medical exams that are typically required with traditional life insurance applications. In addition to the age and policy size restrictions above, criteria that may disqualify applicants from bypassing a medical exam include having previous or pre-existing medical conditions, being a smoker, having a higher weight to height ratio, and having close relatives with medical conditions.
Tip #4 Don’t expect to qualify if you fudge about your health and family medical history just because you don’t have to get physically examined. The underwriting team will review your medical records and may contact your physician to confirm the information in your application.
The main point is that through this process, you get to spend less time to see if you qualify. If you don’t, no sweat because you didn’t have to go through a medical checkup.
Who is Protective Life Insurance Company?
Protective Life Insurance Company was established in 1907 by Alabama Governor William Dorsey Jelks. Over the course of the company’s 100-year+ history, they’ve only had six CEOs, showing their management stability. The company prides itself on 4 core values: do the right thing, serve people, build trust and simplify everything.
Protective has actively completed acquisitions over the years, helping it grow from $1 billion of life insurance in force in 1957 to over $765 billion by its 100-year anniversary in 2007. Protective offers products and services in all 50 states and today provides protection to its customers through 7.8+ million policies.
In 2015, Protective became part of the Dai-ichi Life Insurance Company, Limited, one of the largest global life insurers. With a strong parent company in place, Protective continues to look for new growth and expansion opportunities and in January 2016, Protective completed its second largest acquisition to date, acquiring a block of life insurance policies from Genworth valued at $589 million.
- In business for over 100 years.
- Strong reputation for great customer service.
- Valuable teammate due to their willingness to innovate and deep understanding of the regulatory landscape.
- 2,500+ employees.
- Operating locations in AL, CA, IL, MO, NE, NY, OH, SC, TN.
- 7.8 million policies & contracts in force.
- $767 billion life insurance in force as of 12/31/15.
- Ratings: A+ (A.M. Best), A+ (Fitch), AA- (S&P), A2 (Moody’s).
- Made $5.25 million in philanthropic contributions in 2015.
- Given over $53 million to communities over the past 21 years.
Note: As of December 2016, New York residents are currently ineligible to apply for coverage via the SoFi through Protective. The good news is this restriction is only temporary and is expected to lift in Q2 of 2017.
Why Not Just Apply Directly Through Protective?
The main reason is the ease of the application and speed to qualify. Through SoFi and Protective’s offer, candidates have access to qualify for the 20-minute online application with no medical exam. You don’t even have to be a current SoFi client to apply.
SoFi is combining its sophisticated algorithm developed over the past 5 years with Protective’s 100+ years of underwriting experience to help find the most cost efficient policy for customers. In essence, SoFi is trusting its research to help give consumers the best terms possible.
Applying directly to Protective can still get you a great policy, but the process will take longer and there will be an actual medical exam.
How Much Does Term-Life Insurance Cost?
Here are some sample quotes through SoFi and Protective’s offering.
A 30-year-old male in excellent health and living in California can purchase a
- 10-year, $500,000 term-life policy for roughly $15 per month.
- 10-year, $1,000,000 term-life policy for about $22 per month.
- 20-year, $500,000 term-life policy for about $22 per month.
- 20-year, $1,000,000 term-life policy for around $37 per month.
A 39-year old female in excellent health and living in Texas can purchase a
- 10-year, $500,000 term-life policy for just under $17 per month.
- 10-year, $1,000,000 term-life policy for about $26 per month.
- 20-year, $500,000 term-life policy for about $26 per month.
- 20-year, $1,000,000 term-life policy for around $45 per month.
A 20-year, $1,000,000 term-life policy for $37 – $45 per month is great value. One idea is to match the duration of the policy to when your mortgage will be paid off and/or when your kids finish school (usually college).
As a 39-year-old fella who plans to have a kid in 2017, I should be thinking about getting a 20-year, $2,000,000 term-life policy. Even though I plan to pay down all my mortgages in 10 years, life always gets in the way. Private college tuition will cost over $100,000 a year by 2037 as well.
With no medical checkup for qualifying individuals 40 and under for policies up to $1 million and a ~20-minute application process to see if I qualify, the process is so much better than the past. The process is more efficient because companies like Protective have leveraged technology to gather more datapoints and leverage new types of data in their underwriting metrics.
Everybody should spend some time during the weekend or over the holidays to figure out their life insurance needs for the new year. Here’s their Get My Quote page to see for yourself.
Readers, do you remember getting a medical checkup to qualify for life insurance? Anybody ever get rejected from a life insurance policy application after a medical checkup? How much life insurance do you have and how do you determine the amount?