Cheap Term Insurance? Should we Talk about Banner Life Insurance?

Banner Life InsuranceIf you were to spread sheet quotes from life insurance companies (or have your agent do it) near the top of the list for low price premiums would likely fall a tiny insurance company owned by a massively huge British multi-national, and this tiny life insurer is typically well known for its competitive term rates; this company is the somewhat unique Banner Life Insurance Company.

Banner is a well known competitor in the term quoting game, where it competes quite well with the likes of Genworth, Ohio National, Cincinnati Life, and that other life insurance company with Massachusetts in it’s name: Savings Bank Life (SBLI).  But even more enjoyable to Banner is that it’s one of the darlings for the term quoting world due to is wide availability to pretty much all of the large life insurance brokerage conglomerates.

You see, unlike Ohio National and Cincinnati Life, Banner–like Genworth and SBLI–focuses its marketing and distribution strategy through large brokerage channels, rather than through smaller, more localized agencies.

In fact, if you run out to Google and search for Banner, you’ll find Select Quote–a huge player in the transactional term sales–ranks in Google’s top 10 results for Banner Life Insurance as a keyword search term, and we’re betting, they really like that.  Legal & General, the large multi-national that owns Banner, is also a strong competitor for cheap term rates in the state of NY, where it’s NY version of Banner: William Penn does business.

So is Banner a great term choice?  Let’s find out.

Two Choices

Banner actually has two categories of term insurance available:

  1. OPTerm
  2. Life Value Term

OPTerm is by far the more popular product.  It’s a level term product for 10, 15, 20, or 30 years and it’s convertible to Banner’s permanent products (and Banner actually has a very strong current assumption Universal Life product with very strong guarantees on it) for the entire level term period or all the way up to age 70.  For those who purchase a policy at age 66 or older, they have 5 years to convert to a permanent product.  No conversion credits upon conversion.

There are only two available riders.  Waiver of premium, which can be issued up to age 55 and last until the insured’s age 65.  Waiver will cover premiums for the entire level term period, and follows an any-occupation definition of disability.   The other rider is an accelerated death benefit rider that pays a portion of the death benefit if the insured suffers a terminal illness.

In truth, this is a very lean offering when it comes to riders, but since we’re just talking about simple term for the sake of owning term (think Primerica style life insurance, only cheaper so you have even more money to invest the difference) one could argue that it’s just what’s necessary without any of the fluff.  Or perhaps just enough to cover the basis for those too cheap or too limited on resources to opt for much else.

Life Value Term is somewhat unique for a company like Banner.  Despite being a chic modern life insurance company sold through brokerage general agencies by people who care only to make insurance a transactional process, Banner has an annually renewable term (ART) product.  The consumers out there won’t understand the oddness this poses, but experienced agents will understand my point.  ART is one of the esoteric life insurance products only coveted by the snobbish mutual elite companies who sell it to motivate conversion due to the annually rising premium.

What use does a term-spread-sheeting company have with an ART product?

Well, if you ask Banner directly, they’ll tell you it’s a cost thing (and the big mutuals will too–so long as they aren’t in a closed room where no one from the Press is present).

Banner has an abundance of marketing material focused on highlighting how this product allows people to purchase the death benefit amount they need when level term makes the cost unreachable.  Personally, if an adequate amount of term insurance is busting your monthly budget, chances are good you’re doing something horribly wrong (if you find yourself offended, take a moment for self reflection).

But still, there might just be some merit behind the notion of making coverage affordable now at the level that’s not verging on malpractice because you’re too weak to realize “I can’t afford it” is just a lame excuse to indulge in life’s not so finer things.

I’ve actually done this in the past.

I’ll note that people are highly apt to lapse these policies after a year or two, so if you’re headed down this road because you’ve convinced yourself that you really can’t afford anything else, it might be appropriate to have a come-to-Jesus moment concerning your personal finances.

To get back to topic, the product comes in two choices: a 20 year and 30 year guaranteed period.

You might be wondering “guaranteed what?” as the premium increases annually.  The guarantee is in the increasing schedule.

One thing that does make Banner’s Life Value Term unique is that it follows a guaranteed schedule for the increasing term cost.  Most ART products have a minimum and maximum schedule within which they can bounce around, and that happens to Banner’s product after the guaranteed period.  However, it uniquely follows a very exact increasing schedule for whichever guaranteed period is selected.

Convertibility is sort of this product’s Achilles-heel.  It’s convertible for the guaranteed period of the product (so maybe they are pulling a page from the old mutual play book) or age 70, whichever comes first.  Of course, the same rule for insureds 66+ from OPTerm applies: policies issued after age 66 have a 5 year conversion period.

The same standard riders are also available–waiver of premium and accelerated death benefit.

One of the Most Unique Table Rating Programs in the Industry

Table ratings can often spell serious trouble when it comes to obtaining life insurance.  For individuals with iffy health histories or situations, table ratings can mean much more expensive insurance premiums.  Without diving into all the gory detail, a table rating means the insurance company is going to increase their standard risk class price by a certain percentage.

For permanent insurance some companies have a program known as a table shave that allows certain rated cases to be issued at standard and avoid the increased premium cost brought on by a table shave; term insurance typically doesn’t enjoy this benefit.  What to do?

Enter Banner’s outside the box thinking approach to table ratings.  Instead of basing the rating off the standard risk class pricing, Banner bases their table rates off a multiple of their Standard Plus (one step higher and therefore one step cheaper) risk class.

This means if you’re facing an impending rating due to poor health, Banner should be high on your list of suitable term insurance products.  This program is company wide, so you’ll find it on all Banner Life Insurance products.

Other Notes

If you’re looking for a specific niche concerning Banner, you’ll find yourself on a mission down the rabbit hole.  They are a solid company with solid underwriting (rather aggressive and certainly a top choice for those with a few medical hiccups), but Banner isn’t all that well known for any one carved out niche.

Like a lot of the aggressive cheap term carriers found through the large brokerage general agency distribution channel they are a life insurance company focused mostly on death benefit.  Though these term products can be converted to a current assumption Universal Life policy that has strong guarantees, it’s still not much of a top prize for cash accumulation purposes.

And that’s perfectly fine.  Best to let the cash value life insurance pro’s be good at their thing, while Banner majors in cheap life insurance for death benefit’s sake.

So for cheap term rates, great underwriting that gets better for sicker individuals, and no messy cash value stuff that irritates the termites to worry about, Banner Life Insurance is certainly a top shelf choice.

 

 

 

 


2 Responses to “Cheap Term Insurance? Should we Talk about Banner Life Insurance?”

  1. Dan says:

    Regarding ART or YRT policies, I have a very different opinion, depending on where premium break-even lines up against level term.

    A couple things:

    1) I’ve seen policies where YRT, from a cumulative standpoint, breaks even with 30-year level term in year 30. It starts out half the price.

    2) Big mutual companies have NEVER increased rates from the projected rates.

    3) YRT gives you options to convert, but you can always replace it or hold it if it makes strategic sense later.

    4) if you look at the cost schedules for YRT, they aren’t just bait and switch policies, the curve of their cost is very close to mortality curves. Of course, more cushion is given in later years (60+), but it’s very fairly priced for decades IMO, if you look at mortality tables.

    Please let me know if I’m mis-analyzing anything.

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