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It seems that more and more large retailers want to be everything to everyone. This is a trend that sometimes presents interesting opportunities for customers.
You can buy wine at CVS, dog food at Loweís, cell phones at grocery stores and groceries at Target. The list goes on and on, but perhaps the oddest one yet is this: life insurance at Walmart.
Insurance company MetLife began test-marketing its new prepaid insurance cards this month at Walmarts in South Carolina and Georgia. So now you can buy insurance at the worldís largest retailer. But, should you?
At a glance, MetLifeís prepaid insurance concept is clearly not the best deal for most people in terms of coverage for the money. However, I still think itís a pretty cool idea, and hereís why:
As a newspaper reporter for the past 20 years, Iíve lost track of how many stories Iíve covered involving people who were left in tragic circumstances after a loved one died without insurance.
How many times have you read about families holding fundraisers to pay for funeral costs or to raise money for the expenses of orphaned children?
MetLife has created a product that could introduce people to the habit of having life insurance with little upfront cost or hassle. Imagine that a person gets married, or has a child, creating a need for life insurance, and now someone can buy them a prepaid insurance card as a wedding or baby present.
Itís not a lot of insurance, just a one-year policy worth $10,000 or $25,000, but it also doesnít cost a lot, with prices starting at $69. Ideally, I think someone might receive one of these cards as a gift, and then shop for a longer-term life insurance solution with a larger benefit later.
Thatís why I think itís a cool product. But if the recipient of one of those prepaid cards does not agree, they could use it as a Walmart gift card. The card, really, is just a gift card worth enough to pay for a certain amount of life insurance.
On the downside, the insurance coverage that the prepaid cards can be used to buy is relatively expensive, and itís a nonrenewable, one-year term policy. That means the insurance policy lasts one year. And if your health took a bad turn that year, you might not be able to buy another policy.
Ideally, when you buy life insurance, you want coverage thatís going to stay in effect for the period of time when you may need it. Term life policies are typically offered for 10-year and 20-year terms, and are not very expensive for healthy people.
For example, MetLifeís website shows that a 30-year-old man or woman who qualifies for the best rates could buy a $250,000, 10-year term life policy for $14 a month. Thatís a policy that has the same monthly cost, and the same death benefit, for 10 years and then expires.
In contrast, the MetLife prepaid card offers that same customer a $25,000 one-year policy for $99, which works out to $8.25 a month.
The cost of the prepaid policies ranges from $69, for $10,000 of coverage for ages 18-44, to $429, for $25,000 of coverage for ages 60-65.
Those who buy or receive one of the cards must call a toll-free number in order to activate the insurance, and they must answer some questions in order to be approved for coverage.
For starters, Metlife says customers must be U.S. citizens or permanent residents ďliving in South Carolina or Georgia with no disqualifying health issues, felony or DUI convictions in the past 10 years.Ē
And would-be purchasers will be asked if they have conditions that could result in coverage being denied, such as ďrecent or upcoming medical treatment requiring an overnight hospital stay; any history of alcohol or drug abuse; if theyíve been diagnosed with a terminal illness; if they have HIV or AIDs; and if they have any upcoming chemotherapy or radiation treatments.Ē
Unlike most life insurance policies, this product costs the same for smokers and nonsmokers. Thatís because it has such a short term, and if youíre in otherwise good health when youíre approved for coverage, the insurance company assumes smoking is unlikely to kill you during the following 12 months.
My takeaway: Metlifeís prepaid cards put a life insurance product on retail shelves, like a box of cereal, and that could prompt more people to buy at least some coverage. Itís just better-than-nothing life insurance, with low benefits and a short policy term, but that beats not having life insurance.
Itís life insurance with training wheels, but it could be a good way to get thinking about longer-term needs.
Reach David Slade at 937-5552 or Twitter @DSladeNews.
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