Secret # 1: Don't spend too much time on a life insurance quote.
Don't be fooled by
the low prices you get online - they only apply to you if you are in very good
health. Statistically, only 10% of people who apply get the cheapest policy.
The premium you end up paying has nothing to do with the initial quote you get
online or from an agent. I find it amazing how many times people get cheated by
an agent who quotes company X for a lower price than another agent.
Life insurance
policies are the same price no matter who you buy from! An agent or website
offering a lower premium doesn't mean anything. The prices for a given policy
are based on your age and medical condition. There are a few exceptions to
this, but it is beyond the scope of this article.
Most life insurance
companies have 10-20 different health / price ratings and no agent or website
can assure you that the quote they give you is accurate. You need to apply, get
a checkup, then go through underwriting (which means you take a mini-exam with
a nurse at your home, then the company checks your medical records and reviews
and `` assesses '' your health) to get the true price of the policy. Remember
that a health score also takes into account your family history, your driving
record and the type of profession you practice. Only use quotes to help narrow
your choices to the best companies. You may want to consider a no load or low
policy. The more you save on commissions, the more your policy accumulates. You
can even purchase term insurance at no cost and save a lot on premiums. You
won't get help from an agent, which may be worth something if he's very good.
The most important
factor in determining the price is to match your medical history with the
company best suited to that niche. For example, Company X might be best for
smokers, Company Y for cancer survivors, Company Z for people with high blood
pressure, etc.
Secret # 2: Ignore the hype between permanent term insurance and cash value.
You can go crazy
reading what everyone has to say about buying term insurance vs. whole or
universal life insurance. Big name websites give advice that I think borders on
fraud. Simply put, there is NO simple answer to whether you should purchase
permanent cash value policies or term insurance.
But I think there is
a simple rule of thumb: buy term for your term insurance needs and cash value
insurance for your permanent needs. I've read in various journals and run up
some math equations myself that basically show that if you need insurance
beyond 20 years, you should consider some amount of permanent insurance. This
is due to the tax advantage of the growth of the cash value within a permanent
policy. I am divorced and took care of my children in the event of death. I
probably don't need as much confidence as I do today. I got great feedback on
my policies and paid no taxes. I don't pay the premiums anymore because there
is so much cash in the policies. I let the police pay for themselves. I
wouldn't call most life insurance a good investment. Because I bought my
policies correctly and paid almost zero sales commissions, my policies are
probably my best investments. I no longer own them, so when I die, my
beneficiaries will receive the money both tax free and estate tax free.
Since most people
have short term needs like a mortgage or kids in the house, they should get a
certain term. Additionally, most people want life insurance in place for their
entire life to pay for funerals, help with unpaid medical bills and estate
taxes and therefore a permanent policy should be taken out with the term
policy.
Secret # 3: Consider applying with two companies at once.
Life insurance
companies really don't like this "trick" because it gives them
competition and increases their underwriting costs.
Secret # 4: Avoid captive life insurance agents.
Find a life insurance
agent who represents 50 or more life insurance companies and ask them for a
multi-company quote showing the best prices side by side. Some people try to
remove the agent and apply online. Remember, you don't save money this way
because the commissions normally earned by the agent are just kept by the
insurance company or website insurance company without your premium being
reduced. .
Additionally, a good
agent can help you overcome some of the complexities of filling out the
application, setting up your beneficiaries, avoiding mistakes in owner
selection, how best to pay your premium, and will also be. there to deliver the
check and help your loved ones if life insurance is already in use.
Secret # 5: Consider refinancing old life insurance policies.
Most companies won't
tell you, but the price you pay on your old policies has likely dropped
significantly if you're healthy. Over the past few years, life insurance
companies have updated their forecasts for the lifespan of people. Since we are
living longer, they are reducing their rates quite dramatically. Beware that
the agent can do this to get a new commission, so make sure it really makes
sense.
I am truly amazed at
how often we find that our clients' old policies are twice as expensive as new
ones. If you need new life insurance, consider “refinancing” your old policies
and using the savings on old ones to pay for the new policy - that way there
are no additional costs. We like to think of this process as “refinancing your
life insurance” - just like refinancing your mortgage.
Secret # 6: Realize that life insurance companies have constantly changing target niches.
One day, Company
"X" offers good rates to overweight people and the next month they
are very strict. Company "Y" might be kind to people with diabetes
because they don't have a lot of diabetics on the books - which means they'll
give diabetics good rates. At the same time, the `` W '' company can be very
strict on diabetics as they insure many diabetics and are concerned that they
are too high risk in this area - which means they will give the new ones a bad
rate. diabetics who apply.
Unfortunately, when
you apply, a life insurance company won't say, "Hey, we just increased our
rates for people with diabetes." They will gladly take your money if you
are not smart enough to shop around. This is the number one area where an
intelligent agent can help. Since a good multi-company agent constantly applies
to multiple companies, they'll have a good idea of who is currently the most
forgiving underwriting for your particular situation. The problem is, this is
hard work and many agents are either too busy or not set up to shop efficiently
directly from different underwriters and see who would give you the best deal.
It is much more difficult than submitting a quote to you online.
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