Life Insurance With Bank of America, is it For me?
Usually abbreviated as BofA, Bank of America is among the largest banks in the United States. When it comes to assets it falls second, right after Chase Bank, and it offers a large selection of financial products. The bank has also managed to establish a significant retail presence throughout the country. It is surprising for most people that such a well-established bank does not currently offer life insurance. But, it used to offer life and accidental life insurance.
Bank of America stopped selling its life insurance products in 2013 in order to focus on its specialty, banking. Since they no longer offered their own life insurance policies, they used third parties to provide policies to their customers. Through insurance marketing agencies, the bank was able to partner with different insurance companies like Monumental Life Insurance.
While you cannot buy a new life insurance policy from Bank of America presently, a lot of people had already done so before they stopped offering the service. This means that a good number of people still have life insurance with BofA.
However, below is what you need to know about the life insurance products that Bank of America used to offer.
Life Insurance Products Bank of America Offered
Via other life insurance companies, Bank of America provided two types of life insurance to its customers; term life insurance and accidental death and dismemberment insurance. The bank partnered with Affinion, a direct marketing company to sell these life insurance products.
To assist with and confidently sell accidental death insurance policies, this third-party company acted as a customer service branch between BofA and its then life insurance partner, Monumental Life Insurance Company.
Below are the two life insurance policies that the Bank of America used to offer.
Term Life Insurance
Term life insurance is also referred to as a temporary life insurance policy since it lasts for a specific period as opposed to permanent life insurance policies which end when the policyholder dies. On the upside, a term life policy is more affordable when compared to a permanent life insurance policy.
Also, they are best applicable when you need finances to cover your debts eg mortgage, or for your funeral expenses when you die. Bank of America offered term life insurance policies, which last for a specific period of time.
Accidental Death and Dismemberment Policies
Accidental death and dismemberment(AD&D) policies are very different from the traditional life insurance policy. While it is commonly categorized the same, it is technically not a type of life insurance. With a traditional life insurance policy, the benefits are paid out to the beneficiary in spite of the reason for the death of the policyholder.
On the other hand, an accidental death and dismemberment policy, just as the name suggests only pays out the benefit if the death was accidental. That means that an AD&D does not cover for deaths caused by illnesses but for instance if the member died from a car accident the policy pays out.
There are extremely strict rules as to which situations qualify with this policy, most of which are very unlikely to occur. Most of these policies often cover the loss of two limbs, sight, or hearing, and in other instances when you incur a serious injury from an accident.
Accidental death and dismemberment insurance might not be the best investment because chances of dying from an accident are very low, as per statistics. A small percentage of people however still purchase AD&D because of the affordable premiums. The policies are cheap because of the rare claims, making it affordable for insurers to create inexpensive products.
How To File Claims on Your Bank of America Life Insurance Policy
As mentioned, Bank of America does not offer life insurance or accidental death policies but a lot of people who had purchased them still have their policies. If you have an existing policy with BofA, you can still make a claim if you want to opt-out. However, you cannot make the claim directly to the Bank of America but instead, the company that issued you with the policy. The name of the company should be available in the statements of billing documents of the policy.
Optionally, you can directly contact Bank of America to provide you with the contact information for the insurer.
Possible Challenges of Purchasing Life Insurance With BofA
Buying life insurance with Bank of America is nothing short of disappointing and frustrating. This is because you are not buying directly from the bank since they don’t offer any policies of their own. Hence, you are likely going to run into a handful of problems as explained below.
Purchasing the Wrong Policy
The accidental death and dismemberment policies are often grouped as life insurance but in reality, they work differently. A lot of people purchase such policies with the same expectations as with most life insurance policies only to be disappointed when they don’t get covered under certain circumstances. The expectation is that the policy pays out when the policyholder dies, only to find out that it does not exactly work that way. The accidental and dismemberment policies provided by BofA only provide cover when the death is as a result of an accident.
Hidden fees and ‘fine print’ are simply a breach of trust to the customer since this is information not communicated beforehand. When buying a life insurance policy, you want to pay the quoted amount when choosing your insurance company. Other hidden fees that magically pop up after you have purchased a product simply feel like you have been robbed of your hard-earned cash. These are some of the complaints associated with buying life insurance with Bank of America.
Overpaying for Your Policy
Another problem with working with affiliate programs is that you might end up overpaying for your policy. You don’t get the chance to compare different life insurance products from different carriers, which means that you simply settled for that option. It is possible that you could be paying more than is needed for your particular coverage whereas you could be paying for lesser premiums than you already are paying.
Poor Customer Service
When you decide to buy life insurance through BofA, you will be referred to affiliates working with the bank. Buying a policy through affiliates can be a downer when it comes to customer service. The process of acquiring a life insurance policy itself can be a lot of work depending on the type of product, that coupled with bad customer service can be extremely infuriating. The worst part is that this stress can be passed down to your beneficiaries when claiming the policy proceeds. So it does not only affect you but also your heirs and worst of all, it might take a ridiculously long time before the policy pays out.
Should You Buy Life Insurance Through Another Bank?
Since Bank of America is not the best way to go about your life insurance, is it a good idea to purchase a policy via another bank? Well, a lot of banks partner up with life insurance marketing agencies and provide policies to their customers. Sadly, just like with BofA, using another bank for life insurance is not the best route to use.
The bank simply forwards your information to a different entity that deals with life insurance, so they don’t sell it to you directly. That goes to tell you that your needs are not your bank’s priority, they are only interested in making more money. As a result, you end up with very limited options and in most instances poor customer care service.
Should You Replace Your Existing Bank of America Life Insurance Policy?
A good way to deal with your BofA life insurance policy is to replace it with a new one. There are so many good reasons why you should be considering switching your current Bank of America life insurance. For instance, you will possibly get better rates than you are paying presently based on your age, lifestyle, or health. This gives you an opportunity to choose a better coverage depending on your current needs.
Switching from your existing BofA life insurance policy to a new one also means that you get to choose from a wide selection of products. You will also have riders that you can use if you need to customize your policy. As such, you will have a more functional policy that fits your needs regarding your current situation.
A BofA life insurance policy might not have the best customer service, but replacing it with a new one might help you find an insurer with better customer service. Having an independent insurance provider ensures that you can directly contact the team whenever you have issues with your policy. Buying through a seasoned independent agent also ensures that your questions and concerns about different insurers and easily addressed especially because most of them are well-versed with products from different companies.
If you choose to switch to a different life insurance provider, make sure that you compare different quotes of different insurers. It does not make sense to stick to Bank of America when you can find lower rates and better coverage elsewhere. There is no need to pay too much than you can afford or even stick to a policy you don’t like while you can get better quotes and make a better decision. But on the other hand, if your existing BofA policy has lower rates than your other options, then it might be logical to keep your policy if you don’t mind the challenges it comes with.
Things to Consider in a New Life Insurance Policy
Switching to a new life insurance policy comes with its share of challenges. It is not a walk in the park so you have to ensure that you have strong reasons to switch to your new insurance provider. That said, what are some of the things you need to consider before replacing your existing policy?
The Kind of Policy You Need
The worst mistake you can do when switching life insurance policies is doing so without establishing what you need. Maybe your current financial situation at the time of making the replacement is not the same as it was when you purchased your current BofA policy. Also, with the many types of life insurance policies in the market, your insurer should be able to provide you with an array of options.
For instance, term life insurance policies are a top pick for most individuals because of their affordability. On the other hand, permanent policies offer an additional component that term life doesn’t, the cash value component but on the downside, they are relatively expensive. A final expense policy would be great if you are an older individual who doesn’t qualify for most of these products.
The Application Process
Not all life insurance policies are the same, some have a thorough application process. Most of the time, the application process will be long because of the underwriting process which means that you have to undergo a medical examination. If you are not okay with undergoing a long application process and possibly waiting for a long time before getting approved, you can consider a no exam policy.
The application process is easier and you will get approved faster than with an underwritten one. Make sure to ask your insurer about the application process for different products then choose what you are the most comfortable with.
Good Customer Service
It goes without saying, good customer service is a no-brainer when shopping for a life insurance provider. You shouldn’t have to feel like you are having a difficult time when dealing with your life insurance company. Communication should be easy and if they having systems that make dealing with them hassle-free, for example paying bills online, then it is a good sign of efficiency.
You don’t have to assume that your insurance company is going to pay out claims even when the financial climate is unstable. Before buying any insurance product make sure to check the AM Best rating of your potential insurer.
Find a Life Insurance Agent
Life insurance is a serious and sensitive issue and you don’t want to buy a policy with too little coverage or more than you need. Going through all processes of finding a good insurance company and the right policy for you can also be daunting when you don’t understand the market well. One of the best ways to go about it is to work with a life insurance agent. An experienced agent should be able to introduce you to different insurers for you to choose from and also be able to advise you on the best life insurance product depending on your specific needs.