In late 2022, my spouse and I have been lastly in a position to lock in matching 20-year time period life insurance coverage insurance policies at an reasonably priced fee via Policygenius. For 5 years prior, I had been involved that I wouldn’t have the ability to get accepted at an inexpensive value—all due to a mistake I made by visiting an overzealous sleep middle.
Again in 2016, I used to be bored with paying $1,800 a month for a medical health insurance plan with UnitedHealthcare and by no means utilizing it. I hadn’t seen a health care provider in years, so when a brand new sleep middle opened up close by, I figured I’d as effectively get checked for loud night breathing and put my insurance coverage to make use of.
In fact, one go to was a full battery of assessments, costing my insurance coverage firm about $3,800. At first, I felt good—I used to be lastly getting one thing for all these insurance coverage premiums! However little did I do know, that go to would come again to hang-out me. The unlucky consequence of going to the physician was being flagged with a “sleep-related” challenge, equivalent to sleep apnea, which made it a lot more durable to qualify for reasonably priced life insurance coverage later.
After I tried to resume my 10-year time period life coverage via USAA in 2017 at age 40, they quoted me $450/month—up from the unique $40/month. A ridiculous 11X increased! No thanks. I will look elsewhere.
My First Two Life Insurance coverage Errors
My first actual life insurance coverage mistake was going to a health care provider earlier than renewing my coverage. Had I saved a clear medical file—except for routine physicals—my new coverage would have price nearer to $120/month now that I used to be 10 years older. At all times lock down an affordable life insurance policy before seeing the doctor for something out of the same old.
However frankly, the first mistake was solely getting a 10-year time period coverage at age 36. I ought to have gone for a 30-year term at around age 30. After 30, life tends to get far more sophisticated with housing and household.
Only a yr later, I took out one other $1+ million mortgage to purchase a fixer-upper. Three years later, my son was born. When you’ve kids and debt, life insurance coverage turns into a precedence. A 30-year coverage again then would’ve price me about $30/month—an absolute discount in hindsight.
No less than I managed to course-correct by securing a brand new 20-year, $750,000 time period coverage via Policygenius for $110/month in 2023. They matched us with SBLI, a provider keen to underwrite each me and my spouse, even with my prior sleep middle go to.
However then I made one other mistake—by far the worst one but. It sickens me to jot down this, however as all the time on Monetary Samurai, I share each the wins and the painful losses to try to assist as many individuals as potential.
The Worst Life Insurance coverage Mistake Potential
My spouse not too long ago requested me to ship her our rental insurance coverage coverage from USAA as a result of Wells Fargo, which holds our remaining rental property mortgage, wanted proof of protection.
After I logged into my USAA dashboard, one thing odd caught my eye:
“Degree Time period Collection V Coverage – $1,000,000 for 10 years.”
It regarded like my outdated time period life coverage, so I clicked in. After which—WHAM.
The quantity that jumped out? $885.79/month.
What the hell? What was this doing right here? Was this an commercial or what?
No one of their proper thoughts would pay almost $900 a month for only a $1 million time period coverage—until they have been terminally sick and had no different choices. I definitely wouldn’t.
However dread started creeping in. What if I had been paying this all alongside?
I shortly logged into my Citi checking account, the place USAA autopays are debited, to research.
Unnoticed Cost For Two Years
Here is what I found after I logged into my financial institution and looked for USAA. And let me inform you, it wasn’t good.
To my horror, I had been paying over $800/month to USAA for at the least 18 months straight. That’s way back to my financial institution’s customized search would let me go.
My abdomen sank. How might I be so careless?
Again in late 2022, I assumed I instructed USAA I wasn’t keen to resume my 10-year time period life coverage once they quoted me ~$450/month—a drastic bounce from my authentic $40/month fee.
So why, with out my consent, did they cost me much more?
Since my authentic 10-year time period coverage with USAA expired in January 2023, I’ve paid over $20,000 in premiums to USAA regardless of considering my coverage had ended!
My complete level of getting a brand new 20-year, $750,000 term-life insurance coverage coverage via PolicyGenius in 2022 was in order that I would not should pay the brand new $450/month fee USAA quoted me again in 2017. Oh my.
How Might I Have Missed Overpaying for So Lengthy?
I’ve requested myself this query greater than a dozen instances. Listed below are 5 causes:
- Bundled protection: USAA handles a number of insurance coverage strains for me—rental properties, auto, umbrella, useful private property—so when an $800+ cost hit, I didn’t suppose a lot of it.
- Inconsistent billing cycles with auto-debiting: USAA payments me month-to-month, semi-annually, and yearly throughout completely different insurance policies. At any time when I noticed a big cost, I assumed it was for a quarterly umbrella renewal or one thing comparable.
- Unhealthy timing: Typically I didn’t see the cost in any respect. If I didn’t log into my financial institution that week, the transaction obtained buried by the point I checked.
- Blind belief: I trusted USAA to do the fitting factor. It by no means crossed my thoughts that they’d proceed my 10-year time period life coverage and cost me 18X extra monthly than I’d been paying. I have been a loyal buyer for 23 years.
- Money circulate cushion: I’m lucky to have robust financial savings habits and strong money circulate. The $740–$885 month-to-month cost for over two years didn’t impression my spending conduct. I save first, spend later—however the draw back is being much less watchful with bills.
Regardless of all this, I take accountability. Nobody pressured me to arrange auto-debit. I ought to’ve been extra diligent about reviewing my funds often.
Don’t Count on Your Insurance coverage Provider to Voluntarily Save You Cash
Since 2020, I’ve had a number of conversations with my insurance coverage supplier about property, auto, and life protection. Not as soon as did a consultant flag my life insurance coverage coverage or ask, “Whoa—are you positive you wish to pay over $700 a month for this? Let’s see if there’s a extra reasonably priced possibility that matches your state of affairs.”
As a substitute, I obtained periodic nudges—emails and calls—urging me to extend my property insurance coverage protection. That meant coordinating with a property assessor, letting them in, and finally paying extra when the coverage renewed.
Don’t be lulled into considering your insurance coverage firm is actively looking in your greatest monetary pursuits. Their job is to guard you from threat, sure, however they’re additionally a enterprise. When you arrange auto-debit, they will quietly elevate premiums, and also you may not even discover. On the finish of the day, they’ve a fiduciary responsibility—to not you—however to their shareholders.
Is It Authorized for Life Insurance coverage to Routinely Renew Like This?
A few of you might need empathy and marvel if jacking up a buyer’s life insurance coverage fee by 18 instances or extra is authorized. Sadly, the reply appears to be sure.
In case your authentic coverage has a “assured renewal” clause, and also you don’t explicitly cancel, the insurance coverage firm can proceed the protection as an yearly renewable time period (ART) coverage.
This implies:
- You retain your protection with out new underwriting
- However the premium skyrockets yearly as you age
Most individuals don’t understand this clause even exists. It’s usually buried deep within the effective print. Subsequently, one other step for all of us is to totally learn the contract and ask questions on issues you do not perceive. Do not simply belief your insurance coverage provider to do the fitting factor.
So technically, USAA didn’t break the regulation—however they positive didn’t do me any favors. The consultant instructed me they’ve purchasers who pay these enormous premiums as a result of they merely cannot get protection elsewhere.
Many policyholders fall into this entice. They assume the coverage simply ends—or that premiums keep flat. Insurers financial institution on that assumption to make most earnings.
What I Did to Strive And Get A Refund
Not one to lie down and get trampled on backwards and forwards by a 7-ton elephant, I made a decision to contest the fees. I assumed I clearly instructed USAA in 2017-2019 I’d not renew the coverage at their quoted fee of $450/month. So I most definitely wouldn’t have agreed to $720/month in January 2023 and the newest $886/month prices.
Here is what I did
1. Known as USAA Instantly
Defined:
- I used to be not clearly notified of the shift from degree time period to annual renewable time period (ART)
- I explicitly declined their renewal provide i
- I solely simply found the $885.79/month prices
- I’m requesting a retroactive cancellation and full refund of premiums charged because the time period expired
I used agency however respectful language, equivalent to:
“I’d by no means have agreed to proceed protection at this fee. I really feel misled and would really like a refund for all premiums charged after my degree time period expired.”
2. Escalate if Crucial Or Desired
If USAA doesn’t do something, I’ve the choice to file complaints with:
- My state’s insurance coverage commissioner
- The Higher Enterprise Bureau (BBB)
- The Shopper Monetary Safety Bureau (CFPB)
These companies observe complaints and put stress on corporations to resolve points.
My Life Insurance coverage Premium Refund Request
I perceive I obtained protection in the course of the time I used to be paying premiums. Had I bought a brand new 20-year time period coverage beginning at age 45, I’d’ve anticipated to pay round $150/month, or $1,800/yr. I additionally acknowledge that if I had died throughout this era, USAA possible would have paid out the $1 million dying profit to my spouse. Fortunately, I’m nonetheless alive—so right here we’re.
That stated, I’m not asking for a full refund of the $20,000+ I paid. As a substitute, I imagine a $16,000 refund is a good compromise ($20,000 I paid minus the $4,000 I’d have been keen to pay for 2 plus years).
No wholesome 45-year-old male in 2023 would knowingly comply with pay $886/month for a $1 million time period life coverage. That’s not simply overpriced—it’s freeway theft. I really feel like USAA mugged me for my pockets after which slashed my tires on the way in which out.
How USAA Initially Responded
After I first referred to as USAA to clarify what had occurred, the life insurance coverage consultant I spoke with was dismissive. She stated there can be no refund and that the very best she might do was cancel the coverage. She claimed USAA had despatched a notification in regards to the renewal—one I by no means noticed—and added that some members proceed paying the exorbitant fee for no matter motive, which in her view justified the dearth of follow-up.
After the decision, I sat in silence for about 20 minutes, feeling defeated. Then I made a decision to name again—this time to request proof of the place the notification had been despatched. As a result of actually, is a notification legitimate if the shopper by no means sees it or confirms their intent? I don’t suppose so. A default setting that quietly prices a buyer 18X extra with out express affirmation feels predatory.
The second consultant I reached was far more empathetic. She stated she wouldn’t have paid that premium both. She defined that the notification had been despatched to my on-line message middle. Positive sufficient, after I scrolled again to November 2022, I lastly discovered it.
Perhaps an e-mail alert had been despatched to let me know there was a brand new message in my inbox—but when so, I missed it. Fortunately, this rep took my considerations severely. She stated she’d escalate the problem to her supervisor and the “Member Advocacy Staff.” Hallelujah.
She assured me the advocacy staff would do a radical overview, together with listening to our recorded calls and inspecting the complete account historical past.
The Suggestions From USAA After Their Investigation
The consultant from the Member Advocacy Staff got here again with a proposal: a credit score of two months’ premiums totaling $1,771.58. It was a great first step, however nonetheless felt far quick. I had hoped for a extra affordable compromise—one thing nearer to a $16,000 credit score.
Then the tone shifted. She famous that after reviewing name logs relationship again to 2022, she didn’t hear me explicitly say I didn’t wish to renew the coverage. As a substitute, she claimed I used to be merely inquiring about my choices. To me, that ought to’ve strengthened my case—why would I be asking about choices if I supposed to maintain paying an exorbitant premium? However she disagreed.
So I inspired her to dig deeper into their name logs, additional again in time, to see if there was any file of me clearly expressing my unwillingness to pay a fortune for all times insurance coverage. She agreed and requested me to e-mail any supporting info I might discover within the meantime.
Proof I Wasn’t Prepared To Pay the Greater Premium
I searched my archives and located two articles I had written that clearly documented my battle to seek out an reasonably priced life insurance coverage coverage earlier than my 10-year time period was set to lapse. I despatched each to USAA, full with publication dates, to strengthen my place.
- “Convert Term Life Into Permanent Life Insurance To Keep Your Rate Class” – Printed June 5, 2020
This submit outlines how, after my son was born in 2017, I contacted USAA to discover extending my coverage. After present process a medical examination, I used to be shocked to seek out my premium bounce from $40/month to $450/month as a result of sleep apnea. I declined the provide, stating it was far too costly, and made it clear I’d seek for a extra reasonably priced possibility. - “How I Finally Got An Affordable Life Insurance Policy With No Medical Exam” – Printed December 21, 2021
This text particulars how, after years of looking, I lastly secured a 20-year, $750,000 time period coverage via SBLI for $110/month. I famous that I used to be keen to hold each insurance policies briefly—doubling protection for a yr—whereas making ready to transition off the USAA plan.
These publicly documented posts present my intent and efforts to keep away from high-cost life insurance coverage by USAA and show I by no means agreed to such a steep renewal. I might solely hope they assist USAA reevaluate their place.
Exhausting to Belief USAA With Our Insurance coverage Wants Anymore
Sadly, USAA got here again from additional investigation and stated the $1,771.58 credit score was the very best they may do. They have been shutting the case. Ugh.
What’s most disappointing is that, after 23 years as a loyal USAA member, I actually believed the corporate would do proper by me. I’ve persistently paid my premiums on time and have been a accountable, engaged buyer.
Most individuals don’t totally perceive the intricate particulars of life insurance coverage insurance policies, renewals, and their effective print. I did my greatest to remain knowledgeable, but I nonetheless really feel like I used to be misled and finally taken benefit of. Communication is just not efficient if the opposite facet does not obtain or acknowledge.
With no extra equitable decision, it is onerous for me to proceed putting my belief in USAA.
The One Silver Lining From This Careless Debacle
If there’s any silver lining, it’s this: by sharing my story, I hope to forestall at the least one particular person from falling into the identical entice. Don’t assume your time period life insurance coverage coverage ends when the time period is up—it usually doesn’t. Until you actively cancel it, it might auto-renew, and the premiums can skyrocket.
All this time, I assumed I used to be being a accountable father and husband—saving cash and defending my household in case I have been to go. In actuality, I used to be a careless idiot who didn’t double-check his bills.
Because of this, I truly put my household in a extra compromised place as a result of our diminished month-to-month money circulate. I had bought a house in 2023, which drained my liquidity and elevated my stress for at the least six months.
The primary yr after a house buy is the most financially vulnerable time and I positive might have used that further ~$800/month in medical health insurance premiums I did not understand I used to be paying.
Tricks to Save Cash on Life Insurance coverage Premiums
- Be loud and clear about your intentions on recorded calls—don’t assume something might be understood or famous until you say it explicitly.
- Assessment your bills month-to-month. Don’t let auto-debits go unchecked. If one thing seems to be off, cancel or examine instantly.
- Lock in a 30-year time period life coverage round age 30 whilst you’re nonetheless younger and sure more healthy for the very best fee. Your life will probably get extra sophisticated and costly.
- Keep away from pointless physician visits proper earlier than making use of for all times insurance coverage—they may uncover minor points that elevate your premium.
- Don’t count on your insurance coverage provider to proactively prevent cash. Their purpose is to maximise earnings, not look out for you.
- If you happen to’ve had well being points, go on a well being kick for at the least six months—then reapply to attempt qualifying for a greater fee.
- Regardless of how badly you fail, hold preventing to guard your loved ones’s monetary safety. Nobody else will do it for you.
Going ahead, I’m returning to my “broke mindset”—holding my checking account lean, like a school scholar on minimal wage. Having further money circulate felt good, however for me, it bred complacency and laziness. That ends now.
As punishment for my carelessness, I’m committing to a strict no-spend challenge till I make up for the $14,228.42 in extreme life insurance coverage premiums I paid ($20,000 whole minus the $1,771.58 refund and the $4,000 I’d’ve paid for 26 months of protection). Alternatively, I’ll facet hustle or make new investments to recoup the $14,228.42 in overcharges.
I’ve already spent hours preventing my case and penning this submit, and I hope it helps you make higher life insurance coverage selections. Now it’s time to maneuver ahead in the way in which solely I understand how.
Readers, have you ever ever gone via one thing comparable with a life insurance coverage coverage—or another services or products? Have you ever ever found you have been paying for one thing you didn’t understand, because of auto-debiting or simply plain oversight? If that’s the case, please share your story so I don’t really feel like the one one who obtained duped by carelessness. Distress loves firm—and possibly we are able to all study a bit from one another’s errors.
Life Insurance coverage Coverage Suggestion
If in case you have debt and dependents, getting life insurance coverage is without doubt one of the most accountable monetary strikes you may make. I like to recommend testing Policygenius, an insurance coverage market I’ve trusted for over 10 years. Merely enter your protection wants, and Policygenius will match you with top-rated carriers providing aggressive charges.
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