13 Lucky Tips to Save on Life Insurance

Let’s be honest: we all hate life insurance. We hate thinking about it. Hearing about it. And especially trying to buy it.

But it’s an important part of protecting your family from financial ruin and your assets from disappearing. So, it’s a pretty good idea to get it.

OK, so how do you go about that without getting ripped off? Well, lucky for you, I have some tips
on what to look for and how to save some real money. As well as your sanity.

1. Don’t rely on your employer to provide you with life insurance
If your company gives you life insurance, that’s great. But don’t count on it. First of all, if you get canned or quit, you’ll probably lose it. Plus, it’s probably not as much insurance as you really need. So, look into getting your own policy that can protect your family - and your wealth - properly.

2. Term, Term, Term
Life insurance comes in a variety of types - Whole, Universal and Term are the 3 most popular. Cut to the chase and stick with Term Life Insurance. I know that agents will tell you that Whole and Universal give you a “cash value” over time, but I haven’t found one agent who can tell me how much that “cash value” will be. I also read that it takes 13 years after signing a Whole or Universal policy for the “cash value” to be take hold. I don’t know if that’s true, but it just put one more question in my mind about these policies in relation to Term. With Term, you know how much you’re paying over a set period of time - say 10, 20 or 30 years.

3. Play life insurance companies against each other
You’d be surprised how 2 or 3 different companies come back with extremely different rates for the same insurance for the same person. So, I would suggest that you apply to at least 2 companies minimum when you’re looking for life insurance.

4. Figure out exactly how much you need
How much life insurance do you need? That’s always a tricky questions. Years ago, the rule of thumb was 5 years’ worth of your salary to take care of your family. Then it was 10 years’ worth. Today, I’d say start with 10 years as your base and then take into account some other factors - like how much does your spouse make, and is that enough to take care of your family and your kids’ education? Don’t forget the “paying for education” part or the “spouse retirement” part.

And if you’re single, think long and hard about WHY you would need life insurance? Do you want to leave something to your siblings, friends, relatives? For some singles, it doesn’t make economic sense. But to others it does. It’s an individual decision. So, think about it for a while.

5. Buy exactly how much you need
Once you figure out how much you need, then buy it all at once from the same company. You’ll probably get a better rate when you buy it in bulk. And if not, you can always negotiate.

6. If you have health problems, find a specialist
Life insurance companies don’t like to insure sick people. They think it’s too much of a risk. So, if you have health problems, look for a company that specializes in that health problem. How do you find such a company? Just ask a few agents.

7. Don’t turn an old policy into a new one
I never understood why people turned perfectly good old policies into new ones. I know that agents tell you that you’ll save money. But watch out - a lot of times you’ll pay more one way or another. This is called “churning”. And it’s what agents like to do to earn extra commissions.

8. Fix yourself first
When it comes to life insurance, every pound that you’re overweight will basically cost you. Don’t believe me? I just got 2 quick quotes from ReliaQuote.com for the same person, same amount, same term limit (50 year-old man, $1,000,000 policy, 30 years). The only difference was, quote 1 was for a man who was 5′10″ and weighed 230 lbs. For quote 2, he weighed 220 lbs.

The lowest monthly quote for Quote 1 was $542.50.
The lowest monthly quote for Quote 2 was $453.25.
That’s a difference of $89.25 per month or $1,071.00 per year! For just a 10 lb difference!

So, lose the weight. Then get the insurance.

9. Beware of the Riders
Insurance companies love to come up with ways to get you to pay more for your policy with add-ons called “Riders”. Some of these riders are valuable to your particular situation. Some aren’t. My rule for riders is: check out the riders for at least a few days before you sign the policy. Run the numbers to see if they make sense for you. If your agent gives you grief, BEWARE, he’s just trying to sell you something you probably don’t need. But something that will put some bucks in his pocket.

10. Make sure your life insurance is LIFE INSURANCE
Since everyone hates the phrase “life insurance”, a lot of agents don’t like to use it for marketing reasons. So, they’ll call it something else like a “life protection policy” or a “tax-free savings plan”. WATCH OUT for this. They could be selling you something that isn’t life insurance and doesn’t give you the protection and benefits of life insurance.

11. Find the low-load companies
There are life insurance companies out there that charge very low commissions. In fact, some even charge nothing for some of their policies. So, how can you find these bargains? Once again, ask your agents.

12. Watch out for monthly fees
As I said before, life insurance companies love to find ways to take more money out of your pocket. If something sounds too good to be true - like automatic monthly deposits - check them out. They could be adding extra fees to your monthly rate.

13. Get if while you’re young
This is plain common sense. But a lot of us have put off getting life insurance for years. Now, it may not make us feel good to hear it, but it’s a fact: the younger you are, the lower your monthly premiums should be. The older you get, the higher your premiums should be.

SPECIAL TIP: If you’re nearing 50 years of age, get your life insurance quickly. Because after 50, the rates rise dramatically plus you won’t be able to get a 30 year policy.

OK, so there are some tips on buying and saving on life insurance. If you know of any more, please let us know.