Helpful Hints for Buying Life Insurance

1.   Determine How Long You Need Insurance For.

Term insurance is the most affordable and more widely available than permanent insurance (UL, T-100, Whole Life).  As a result the prices can be pretty competitive.  Insurance companies will require that you get a medical exam to assess your health and their risk to insure you.  There are other types of life insurance available without a requirement for medical evidence, but the premiums are usually quite high because your risk would be uncertain.  Insurance companies more or less assume that you’re uninsurable and price the policy accordingly.

2.   Get a Medical Exam (provided by an RN and paid for by the insurance company)

Good health corresponds to lower premiums because your insurance company will see you as less of a risk. Some people choose to purchase “guaranteed issue” life insurance policies because there is no need to provide medical evidence of insurability.  The prices for this type of insurance tend to be quite high (as mentioned in Tip 1).  Having a medical exam and/or filling out a questionnaire will be worth the major savings.  The exam is very simple and can is performed by an RN at your convenience in your own home.

3.   Joint Policies.

If your spouse also needs insurance, then you may want to consider a joint policy, which can often save you up to 15% per year on your premiums.  This is not always recommended because there is a different insurance need for each spouse, but for joint risks (i.e. the mortgage), then have a Joint-First-To-Die policy can help you save.

4.   Don’t Over-Insure.

Insurance doesn’t get less expensive when you buy more…it’s not Costco L.  Policies are based on a cost/$1,000 of coverage which is set.  You need to decide how much insurance you need and for how long, then find the solution that fits.

Things to consider:

  • What are your expected funeral costs?
  • How much debt would you like to have paid upon your death?
  • How much of your net annual income will your surviving dependents need?
  • Will your family need funds to pay for the children’s education?

Since your life and circumstances are constantly changing, review your policy regularly, and adjust it to meet your needs.

5.   Compare and Re-evaluate Annually.

Your family’s insurance needs will change over time and the rates offered by insurance companies for new policies will also change.  Always know when your policy renewal is (the end of the term) and if coverage is needed beyond that point, then seek to replace it before it renews.  When a policy renews, the prices will increase by a multiple of 5 – 10 times. OUCH!

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