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 price by means of Policygenius. For 5 years prior, I had been involved that I wouldn’t be capable to get authorized at an affordable worth—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 properly get checked for loud night breathing and put my insurance coverage to make use of.
After all, one go to became a full battery of checks, 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” problem, comparable 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 by means of USAA in 2017 at age 40, they quoted me $450/month—up from the unique $40/month. A ridiculous 11X greater! No thanks. I am going to 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 report—other than routine physicals—my new coverage would have price nearer to $120/month now that I used to be 10 years older. All the time lock down an reasonably priced life insurance coverage coverage earlier than seeing the physician for something out of the standard.
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 time period at round 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 got youngsters 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.
At the very least I managed to course-correct by securing a brand new 20-year, $750,000 time period coverage by means of 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 at all times on Monetary Samurai, I share each the wins and the painful losses to try to assist as many individuals as doable.
The Worst Life Insurance coverage Mistake Attainable
My spouse lately 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:
“Stage Time period Collection V Coverage – $1,000,000 for 10 years.”
It appeared 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 practically $900 a month for only a $1 million time period coverage—except they have been terminally unwell and had no different choices. I actually 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 analyze.
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 no less than 18 months straight. That’s way back to my financial institution’s customized search would let me go.
My abdomen sank. How may 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 after they quoted me ~$450/month—a drastic soar from my authentic $40/month price.
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 by means of PolicyGenius in 2022 was in order that I would not need to pay the brand new $450/month price USAA quoted me again in 2017. Oh my.
How May I Have Missed Overpaying for So Lengthy?
I’ve requested myself this query greater than a dozen occasions. Listed below are 5 causes:
- Bundled protection: USAA handles a number of insurance coverage traces for me—rental properties, auto, umbrella, helpful private property—so when an $800+ cost hit, I didn’t assume a lot of it.
- Inconsistent billing cycles with auto-debiting: USAA payments me month-to-month, semi-annually, and yearly throughout totally different insurance policies. Every time 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 appropriate 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 move cushion: I’m lucky to have robust financial savings habits and stable money move. The $740–$885 month-to-month cost for over two years didn’t influence my spending habits. I save first, spend later—however the draw back is being much less watchful with bills.
Regardless of all this, I take duty. Nobody compelled me to arrange auto-debit. I ought to’ve been extra diligent about reviewing my funds frequently.
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 certain you need 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 an alternative, I acquired 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 in the end paying extra when the coverage renewed.
Don’t be lulled into considering your insurance coverage firm is actively searching in your finest monetary pursuits. Their job is to guard you from danger, sure, however they’re additionally a enterprise. When you arrange auto-debit, they’ll quietly increase 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 Mechanically Renew Like This?
A few of you may need empathy and surprise if jacking up a buyer’s life insurance coverage price by 18 occasions 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 typically buried deep within the wonderful 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 appropriate factor.
So technically, USAA didn’t break the regulation—however they certain didn’t do me any favors. The consultant instructed me they’ve shoppers who pay these large premiums as a result of they merely cannot get protection elsewhere.
Many policyholders fall into this lure. They assume the coverage simply ends—or that premiums keep flat. Insurers financial institution on that assumption to make most income.
What I Did to Attempt And Get A Refund
Not one to lie down and get trampled on forwards and backwards by a 7-ton elephant, I made a decision to contest the costs. I assumed I clearly instructed USAA in 2017-2019 I’d not renew the coverage at their quoted price of $450/month. So I most actually wouldn’t have agreed to $720/month in January 2023 and the newest $886/month prices.
Here is what I did
1. Referred to 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 supply
- 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, comparable to:
“I’d by no means have agreed to proceed protection at this price. I really feel misled and would really like a refund for all premiums charged after my degree time period expired.”
2. Escalate if Vital 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 Client Monetary Safety Bureau (CFPB)
These companies monitor complaints and put stress on firms to resolve points.
My Life Insurance coverage Premium Refund Request
I perceive I acquired protection through 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 seemingly would have paid out the $1 million demise 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 an alternative, 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 conform to 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 best way out.
How USAA Initially Responded
After I first known as USAA to elucidate what had occurred, the life insurance coverage consultant I spoke with was dismissive. She stated there could be no refund and that the very best she may do was cancel the coverage. She claimed USAA had despatched a notification concerning the renewal—one I by no means noticed—and added that some members proceed paying the exorbitant price for no matter purpose, 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 consumer by no means sees it or confirms their intent? I don’t assume 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. Certain sufficient, after I scrolled again to November 2022, I lastly discovered it.
Perhaps an electronic 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 critically. She stated she’d escalate the problem to her supervisor and the “Member Advocacy Workforce.” Hallelujah.
She assured me the advocacy crew would do an intensive assessment, together with listening to our recorded calls and inspecting the total account historical past.
The Suggestions From USAA After Their Investigation
The consultant from the Member Advocacy Workforce got here again with a suggestion: a credit score of two months’ premiums totaling $1,771.58. It was an excellent 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 need to renew the coverage. As an alternative, 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 report of me clearly expressing my unwillingness to pay a fortune for all times insurance coverage. She agreed and requested me to electronic mail any supporting info I may discover within the meantime.
Proof I Wasn’t Keen To Pay the Larger Premium
I searched my archives and located two articles I had written that clearly documented my battle to search 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 bolster my place.
- “Convert Time period Life Into Everlasting Life Insurance coverage To Preserve Your Charge 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 search out my premium soar from $40/month to $450/month resulting from sleep apnea. I declined the supply, stating it was far too costly, and made it clear I’d seek for a extra reasonably priced possibility. - “How I Lastly Acquired An Inexpensive Life Insurance coverage Coverage With No Medical Examination” – Printed December 21, 2021
This text particulars how, after years of looking, I lastly secured a 20-year, $750,000 time period coverage by means of 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 may solely hope they assist USAA reevaluate their place.
Arduous 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 absolutely perceive the intricate particulars of life insurance coverage insurance policies, renewals, and their wonderful print. I did my finest to remain knowledgeable, but I nonetheless really feel like I used to be misled and in the end taken benefit of. Communication will not be efficient if the opposite aspect does not obtain or acknowledge.
And not using a 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 stop no less than one particular person from falling into the identical lure. Don’t assume your time period life insurance coverage coverage ends when the time period is up—it typically doesn’t. Until you actively cancel it, it could 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 move. In actuality, I used to be a careless idiot who did not double-check his bills.
Consequently, I truly put my household in a extra compromised place resulting from our diminished month-to-month money move. I had purchased a home in 2023, which drained my liquidity and elevated my stress for no less than six months.
The primary yr after a house buy is the most financially weak time and I certain may have used that additional ~$800/month in life insurance coverage 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 can be understood or famous except you say it explicitly.
- Overview your bills month-to-month. Don’t let auto-debits go unchecked. If one thing appears to be like off, cancel or examine instantly.
- Lock in a 30-year time period life coverage round age 30 when you’re nonetheless younger and sure more healthy for the very best price. Your life will most definitely get extra sophisticated and costly.
- Keep away from pointless physician visits proper earlier than making use of for all times insurance coverage—they could uncover minor points that increase your premium.
- Don’t count on your insurance coverage provider to proactively prevent cash. Their aim is to maximise income, not look out for you.
- In the event you’ve had well being points, go on a well being kick for no less than six months—then reapply to strive qualifying for a greater price.
- Regardless of how badly you fail, preserve 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 university pupil on minimal wage. Having additional money move 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 problem till I make up for the $14,228.42 in extreme life insurance coverage premiums I paid ($20,000 complete minus the $1,771.58 refund and the $4,000 I’d’ve paid for 26 months of protection). Alternatively, I’ll aspect 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 best way solely I understand how.
Readers, have you ever ever gone by means of one thing comparable with a life insurance coverage coverage—or some other 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? In that 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 will all study somewhat from one another’s errors.
Life Insurance coverage Coverage Advice
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.
To expedite your journey to monetary freedom, be a part of over 60,000 others and subscribe to the free Monetary Samurai publication. Monetary Samurai is among the many largest independently-owned private finance web sites, established in 2009. All the pieces is written primarily based on firsthand expertise and experience.
