Term Life Price Quotes On The Net: Not Quite Clicking

Online quotes for term life insurance are continuing to show inconsistency, with the gap between the highest and lowest average quotes expanding (after narrowing in our last survey) in National Underwriters most recent foray into the world of online insurance.

In this latest survey of online term life insurance marketplaces (conducted in August 2001), we found a difference of 103% between the absolute lowest quote we received and the absolute highest quote on the same risk. This contrasts favorably with the 160% difference we found in our March 2001 survey.

A different view of the results gives an entirely different impression, however. In the March 2001 survey, the average of the lowest quotes from the sites on our test case was $217, while the average of the highest quotes was $279, a difference of $62. (All quotes were on an annual basis.) In the prior survey, conducted in August 2000, that gap was $92.

In our latest research, however, the average of the lowest quotes was $210 per year and the average of the highest quotes was $283 per year, a difference of $73.

Thus, over the past five months, the gap between lowest and highest average online quotes has expanded by nearly 18%, which is not good news for consumers who want to shop for term life online.

On the good news side, that gap has shrunk by nearly 21% over the past year, as compared with the average highest and lowest quotes per site we found in our August 2000 survey. Clearly, however, the fluctuations over the past year show that prices have yet to stabilize in the online term life area.

As was the case in our last online term life shopping experience, the purpose of the current survey was to see how quickly the services could deliver quotes and how low (or high) the quotes would be at each Web site.

In seeking quotes, I specified a $100,000 face amount for 10 years of term life insurance, just to keep the numbers round. Great care was taken to answer the questions in the same way at each site, but it should be noted that not all sites ask the same questions, and some go into greater detail.

Wherever possible, I requested quotes in the “super-preferred” category. Not all sites offered the option of selecting a category, however.

The results here are reported in no particular order and are not intended to rate the sites or their products.

My first stop on my mission to get online term life quotes was InsWeb (www.insweb.com). Not much had changed since my last visit; the site was easy to negotiate, had a minimum of screens to deal with, and quickly offered up four instant quotes.

Two of the quotes were not useful, however, since they were only guaranteed for five and eight years, and not for 10 years as I had requested. The two that remained were North American ($234 per year) and The MONY Group ($215 per year). In both cases, I had to multiply the stated premium by 12, since InsWeb presents premiums in a monthly format.

Next stop on the insurance information highway was Insurance Quote Services Inc. (www.iquote.com). I found a marked difference here in the level of the quotes versus my last visit. I received five instant quotes that fit my parameters (and 29 that didnt).

The usable quotes ranged from $299 a year from North American to $365 a year from Old Republic. Five months ago, the lowest and highest quotes here were $194 and $221.

The difference may be accounted for by the fact that the rating engine seemed to be paying more attention to the fact that I occasionally suffer from asthma as an allergic reaction (although they had this information last time as well).

Regarding the asthma, the site told me: “Due to the varied nature of these conditions, you will need to contact an agent to make sure that the quote provided to you accurately reflects your current medical status.”

This factor may also account for the differences in the quotes I received from North American at InsWeb and IQS. On the other hand, theres really no way to tell what factors affect the online rating engines.

I next visited Term Life Insurance 4U (www.term-life-insurance-4u.com), where the Internet Pipeline rating engine gave me 14 quotes ranging from $180 from MONY (the lowest quote I received anywhere) to $350 from U.S. Financial.

The quote process was quick and easy, with only a single screen of questions to answer.

I noticed that this site has also stopped claiming it has the “Lowest Rate Term Life Insurance Quotes,” although ironically that was the case with this survey.

One interesting point was that I received yet a third different quote from North American ($194). The lesson here is apparently that if youre buying insurance online from North American, try as many different marketplaces as possible to get the lowest rate.

My next stop was 1stQuote (www.1stQuote.com), which made me answer only a few questions, then generated 20 quotes. Unfortunately, only seven of the quotes were within the parameters I had set.

Quotes from 1stQuote ranged from $191 from First Colony Life to $283 from Lincoln Benefit Life. North American again supplied a quote, this time at $201 per year.

I also visited Quotesmith.com (www.quotesmith.com), where, as usual, the questioning was briefthey only wanted to know the coverage amount, term, my sex, tobacco use, height and weight, state of residence and whether or not I was a private pilot.

Quotesmith.com gave me
25 quotes, 23 of which fit the bill. They ranged from $180 from MONY (the same lowest overall quote I had gotten at Term Life Insurance 4U) to
$250 from First Penn-Pacific Life/Lincoln National.

Finally, I stopped at AmericaQuote (www.americaquote.com), which again took top prize for brevity on questions. I only needed to tell them my gender, whether or not I had used any nicotine products in the past year, my age, and the amount of insurance.

I received five qualified quotes ranging from $193 a year from First Colony to $218 a year from First Penn-Pacific. The ubiquitous North American again came in at $201.

Unfortunately, while I did get five good quotes, I also received 67 that were useless. Apparently, fewer questions means a kind of shotgun response from the rating engine. For that reason, consumers are cautioned to get more details on quotes from sites that dont ask a lot of questions. Such questioning could avoid the unpleasant experience of being told that ones actual premium will be much higher than first quoted.

To add a new wrinkle to our research, I also visited the Web sites of life insurers themselves to see if I could get instant quotes.

When I went to Amicas Web site (www.amica.com) and requested a quote, I was immediately linked to InsWeb, where I received a quote of $442 per year, but this was based on a five-year rate guarantee, instead of the 10-year period I had requested.

At Prudentials site (www.prudential.com), I was able to get a qualified quote of $264 per year. I had to wade through a lot of screens and questions to get that quote, but somehow I had the feeling it might be more accurate than others I had received from some online aggregators.

Prudential also offered in-depth explanations of the differences between various types of life insurance, a feature that consumers should find useful.

At MetLife (www.metlife.com), I got a nice cartoon of Peanuts Charlie Brown, but was unable to get any online quotes on term life. The same was true for The MONY Group.

Overall, our advice to consumers regarding online shopping for term life insurance remains the same. Given the unpredictable fluctuations in pricing that are evident online, a lack of patient research could end up costing consumers more than they planned on spending.

Consumers are still better off sampling prices online, then consulting an agent or broker about details and more accurate pricing.


Reproduced from National Underwriter Life & Health/Financial Services Edition, August 27, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


Copyright 2001 by The National Underwriter Company. All rights reserved. Contact Webmaster