- Tips for getting the best deal on life insurance
- January 16, 2014
6. Rethink extreme sports
If you were thinking about purchasing life insurance now, this would not be an ideal time to start skiing, scuba diving or BASE-jumping. While your fascination with extreme sports could disqualify you for a life insurance policy altogether, in most cases you will likely receive a rated policy. This could add a surcharge of $2 to 10 or higher per each $1,000 of coverage.
“It is very rare that someone would receive a table four rating (the highest by most standards) for an extreme sport or ‘hazardous avocation’ which is double the premium,” said Jack Dewald, chair of the LIFE Foundation. “A Table four rating is the highest rating you can generally receive on a life insurance policy. It is usually for people with severe medical conditions and is rarely issued for hazardous avocations.”
7. Pay the yearly premium
When you decide on a method of payment for your premium, you can generally pay annually, every six months, every three months or once a month. Insurance experts recommend paying yearly because you may be charged extra fees for paying monthly.
“Typically it is cheaper to pay the yearly premium all in one sum,” says Al Lurty, Senior Vice President and Head of Business Development for ING.. “By paying monthly, quarterly or semi-annually you might have to pay additional charges.”
If you’re young and healthy, refrain from purchasing guaranteed or simplified issues policies
Although these policies are a feasible option for the potentially uninsurable, they bring with them steep premiums. Simplified issue requires no medical exam, some brief health questions, a shorter application turnaround and instant approval, but they also come at a higher rate.
Guaranteed issue policies require no medical examination or health questions and are generally issued to those who can’t find life insurance elsewhere. These policies only provide enough benefit to cover funeral expenses, typically 20,000 dollars. It is also very possible that your premiums will exceed the death benefit.
Neither of these policies are good options for someone who is young, healthy and can find affordable insurance through traditional lines.
8. Reevaluate your insurance needs every year
If the primary reason for taking out a life insurance policy is to replace income in order to protect your dependents from a financial crisis, bear in mind after your children leave the nest and become financially dependent, you may no longer need to have them on your insurance policy. Also, when you are retired and living off social security or investments – such as a pension, you may not have to carry as much life insurance. You can use our life insurance needs calculator to evaluate how much insurance you should purchase.
9. Purchase while you’re young
Life insurance is priced based on your mortality, so anything that puts your mortality at risk is going to cost you more in premiums. This includes your age and any health risks you have when you purchased the policy. Based on age, a male in his 20s might pay $133 in premium for a term life policy with a 10-year term, while a male in his 50s would likely pay $310 to $455 for the same term.
Nevertheless, the cost of insurance varies from company to company and takes a number of health conditions into consideration to determine a rate. You’ll get a better value for your purchasing dollars if you take out a policy at a younger age.Pages: 1 2
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