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Six secrets and tips for buying life insurance

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.