Group Life Insurance: Why Protection Is Cheaper In Bulk
Group life insurance rates tend to be substantially lower than the rates for individual policies. Like anything from cans of soup to reams of paper, life insurance is cheaper when you buy it in bulk. There are many reasons why it makes sense for insurance companies to offer lower rates to groups of people than they do to individuals. By doing this, a company can attract lucrative customers like business owners who need to insure their employees. This method of pricing allows insurance companies to expand their businesses while offering the best possible deal to countless entrepreneurs and their employees.
An agent who deals with these kinds of bulk customers can sell many more policies than if each one were an individual sale. An agent making a sale has to give his or her sales pitch, negotiate a contract, go through a series of meetings, and take care of a mountain of paperwork and legal documents. This entire process must be gone through for each individual customer, which can severely limit an agent’s earning potential if the only money the agent sees is a single commission on each of these involved and lengthy policies. By contrast, when handling a business owner or other client who is shopping for a group life insurance policy, the agent needs only go through this series of steps once before collecting a hefty commission based on the number of policies sold.
A broker who makes these kinds of deals will be able to do a higher volume of business, but that is not the only reason why bulk rates on life insurance make economic sense. Even if a company makes a fairly small amount of money on each life insurance policy by selling them at low bulk rates, the insurance company still comes out well ahead in terms of profits given how precious the agent’s time is. Perhaps most importantly, the customer will be able to afford to insure a larger percentage of his or her employees. This means that the low cost of group life insurance makes it possible for more people to become insured, allowing the insurance business to grow while more Americans sleep soundly each night knowing their insurance policies will provide for their loved ones in the future.
