Who is the term insurance low cost leader?

By Jeff Reed

Kestler Financial Group


American General. As a result of the recent price reduction, they are now the low cost leader in a significant number of cells, leaving some of the carriers who have built their reputation on low term prices behind. The competitive intelligence regarding their pricing is great, and you can see some comparatives here, but what I find more interesting is how this can change the term insurance market on its head.

The aforementioned carriers who have made price and/or compensation their only value proposition may just be in trouble. How so? Quite simply, if they are no longer the low cost leader, and a carrier like American General has risen to the top, why would anyone continue to do business with these other carriers? The compensation at American General is outstanding, their underwriting is certainly easier to deal with, and they have a full suite of products for conversions available in the first five policy years, with a strong IUL available in year six and beyond.

If that isn’t enough, then consider this: American General is even more competitive on the mildly rated case. For years, American General has used a special rate class as the table rating base rate. This special rate class is considerably cheaper than their already competitive standard rates. The result is that the increase between a standard policy and one rated two to four tables is significantly less than the competition’s. The result is a fantastic price for mildly rated clients.

When you combine all of these factors, American General may be the best place to take your next term case, preferred, standard or otherwise. Solid underwriting, top compensation and industry-leading pricing all combine to make it easier and more profitable to consolidate your term business with a carrier that offers the broadest value proposition in the market.

A word of caution: This does not mean to flood American General with every piece of business you write. Nothing replaces solid field underwriting to drive that case to the best carrier the first time. Barring a known issue where another carrier is known to be superior from an underwriting perspective; however, I think it is time to work smarter with American General.