By Bill Boersma
I’ve always known about SelectQuote, but I’ve never paid attention to it. However, recently I ran across an advertisement.
I know marketing can often go over the top, but this struck me as odd. “Save more than 50% compared to what?” is all I could think of. Where on earth is someone going for their term insurance that could possibly be more than twice as expensive as what they can offer?
The Process
I’ll admit I didn’t really understand their model. I viewed them as a “term engine” for people to get numbers and maybe they got fees for referring business. I decided to fill out their online form.
Literally, in less than a minute from hitting the button I received a pone call. It was from a pleasant man asking me about my day. Since they know insurance must be on my mind, they call instantly and then it appears they put the lead out to a bank of salespeople to transfer inquires to. While speaking with the salesperson I asked if he was independent or connected to SelectQuote and he proudly stated “Oh, we’re all captive agents with SelectQuote.” I’ll admit I had no idea.
Same as Anything Else
In other words, SelectQuote is a life insurance agency, just like ABC Insurance down the street. There’s nothing wrong with this. It’s just that I think consumers believe there is something different or special about SelectQuote. Maybe that there’s not a traditional agent, so it costs less?
The agent asked me long list of questions to figure out how he should quote what I was looking for. There were most of the questions you’d find on a typical life insurance application. He was pleasant enough and did a decent job and asked enough questions to get a sense of what I was trying to accomplish. Again, I don’t have any problem with this.
What I would like the market to know is that whatever they sell you, it’s the exact same premium as where you would get anywhere else, all things being equal. There are no special products. There is no commission discount. I’m wondering if people knew this would they still fill out a form online or call an 800 number when they could get a local agent to do the same thing who may develop a relationship that would result in better servicing over time? I suppose it could go either way. Maybe some people do this just so they don’t have to deal with a local agent.
The Problem
I asked him to email me quotes, and he did. I’m not sure how many insurance carriers they deal with, but you can see seven of them listed on the advertisement above. Here’s where the main problem lies, in my mind. Per my experience, they take your data and find the cheapest term insurance quote. You might be asking, “Why not?” I would answer that the world has changed too much and, not that you should have ever commoditized life insurance before, but I feel you can’t even more nowadays, even with term insurance.
There’s been too many changes in the market. The way carriers have crafted language in their contracts, or at least how they interpret and operate by contractual language now, the typical consumer has no understanding of the pros and cons of various products and what that might mean for them down the road.
The lead insurance company they suggested to me is a well-known carrier and is very competitive. However, I’m in this business and I would never recommend that product. I’m not going to get into the whys and wherefores today, but there are downsides that may very well come back to bite policy owners in the future.
Back to my original question, save over 50% compared to what? What a dubious statement. I don’t see how they’re saving anyone that much premium. I suppose once in a great while there’s some weird, niche scenario where they technically might, but it certainly isn’t enough to lead people to believe huge savings are in the offing, at least not on an apples-to-apples basis. Maybe it’s compared to guaranteed issue group or association term insurance? Individual underwritten coverage could be substantially less, but the attention-grabbing ad still doesn’t set right.
Their model simply brings to the table everyday products attainable through most agents. Again, that’s fine and I’m for anything that gets coverage on people who need it, but it’s not special and maybe not as good as market alternatives. A true expert still brings real value.
Bill Boersma is a CLU, AEP and LIC and the founder and owner of OC Consulting Group. More information can be found at www.OC-LIC.com, www.BillBoersmaOnLifeInsurance.info or email at bill@oc-lic.com or call at 616-456-1000.
