Everyone loves saving money, myself included. There are plenty of times I’ve gone shopping for that one item that I’ve been needing only to walk out empty-handed. If that item isn’t on sale, or if I know it’s going to be on sale in the next month or two, many times, I just can’t justify the purchase. It’s not about the money—I just like to know that I’ve gotten a deal. I’m not alone here as we all like to know that we’re getting the best for our money.
The problem with saving money on your life insurance is that we all know we need it but no one wants to talk about it. For those who do own their life insurance, many don’t want to be hassled about reviewing their coverages. Let’s be honest, many of you reading this right now have had bad experiences with pushy life agents. On top of that, people don’t buy life insurance the way they used to and that’s a good thing in many ways. So for those of you who are educating yourself before you buy and for those of you who are questioning whether you’ve gotten a good deal if you’re willing to follow these tips, you’re going to save some money and that will make this process worthwhile. Not to mention the good feeling you get when you know your family or your business is protected, come-what-may.
These few tips can save you thousands over the life of the policy, especially on your term life insurance.
Life Insurance is All The Same, Right?
This is the simplest tip I can give you as you start shopping for your policy. If you don’t remember anything I write here, remember this: insurance companies are vastly different in how they underwrite, their financial ratings, the types of risk they’re willing to cover, the premiums that they charge, and the options built into the policies. I can’t underscore this enough — selecting the right insurance company for you may very well save you, 30, 50, and even 70% on the premiums you pay. I know you just read that and thought those numbers were sensationalised but they’re not. There is seldom a week that goes by that I’m not slashing a premium in half for a client on their term life insurance. Every life insurance company seeks to fill a niche in the market. When I say niche, think your gender, your build, past health, current health, the medicines you take, the places you travel too, the hobbies you have, and even the most unfair of them all, your family’s health. If you fit their niche, then you stand a better chance of paying a good premium. So that begs the question, how is a consumer to know? You need to be working with an agent with access to many different insurance companies and more importantly, you need to work with an agent who knows how a life insurance company will underwrite you. You just can’t go to a website, plug in your date of birth and your gender and expect that you’re going to pay the premiums you see. It doesn’t work that way as many times you’ll never be given the premiums you see but something more expensive. The moment you sign the application, many of you will find out after the underwriting is completed that you’re paying 50% more than the originally quoted premium. Here’s the thing, if you’re agent can not tell you with some accuracy, how you’re going to be underwritten, you need to walk away. This type of agent will recommend that you just fill out the application and “you’ll see what the underwriter comes back with.” That’s horrible advice from a lazy agent who knows that if they just get you into the application process, you’re far more likely to keep something on the back end.
Should You Submit an Application With One Appointment?
No! Think of the first time you meet an agent as a first date. Ask yourself, do I like this person? Do I trust this person? Does this agent seem professional? Before an agent ever mentions getting you into an application, they need to know everything they can about your health and about your needs —you can’t do that in one appointment! Take your time! Make a follow-up appointment and agree to speak with the agent again after they’ve had a chance to shop around and actually talk with an underwriter on your health. You should expect to have at least two to three appointments with the agent throughout the process. Anything less, and you need to keep shopping. Lastly, before you make that first appointment, make sure you’re working with an independent life insurance broker. An independent agent doesn’t work for an insurance company so they’re not required to sell you just one company’s policy. They can view you with less bias as they’re not selling just one company’s products. They can shop around to find the life insurance policy that’s the best fit for you as an individual.
You just can’t go to a website, plug in your date of birth and your gender and expect that you’re going to pay the premiums you see.
Choosing the Right Type of Life Insurance
When you start shopping for a policy, you’re going to find that there are many different types of life insurance. Take your time and find the type of insurance that fits your needs best. If you’re on a budget, any many people are, you’ll want to consider term life insurance. Term life insurance allows you to afford a good deal of coverage for much less money than other types of insurance. Starting your life insurance with term insurance is a great way to get started when you’re young, have a family, or are a one income family or single parent. You’ll want to buy as much of it for as long as your budget allows. If you’re on a budget and you go the term route, just make sure that your policy has good conversion options. Conversion allows you to convert your term insurance into permanent options in the event that you’re no longer healthy enough to qualify for life insurance, having conversion options will guarantee that you will always be able to have some coverage. A good life insurance company will have numerous conversion options for you. There are plenty of cheap, term insurance companies that only have one conversion option, which usually exponentially expensive. You’ll want a company with at least three to four options for convertibility. Conversion will also let you make your term insurance into a permanent policy at a time of your choosing when your budget is better or you have more discretionary income.
Should I Do No-Exam Life Insurance?
If you’re not afraid of needles and you have the time, always, always, always, do an exam. The quickest way to guarantee on average that you’re going to pay more for insurance is to do what is called guaranteed acceptance insurance or simplified issue life insurance. There are many life insurance companies that will issue a policy to you with $200,000-$400,000 of coverage without requiring an exam. It’s an easy and convenient way to get insurance but you can bet it’s more expensive. Insurance companies just charge you more to cover the risk that you’re an unhealthy person. If you’re a healthy person, you can more often than not, save money by doing the exam. An insurance company will charge you less premium if they know that you’re healthier than the general public. There are always exceptions to the rule. In this case, I know of at least one life insurance company that will offer $1 million in coverage without an exam. But they’ll only do it if you’re in preferred health or better. Anything less than preferred and they’ll be asking you to schedule your exam.
Insurance companies charge you more to cover the risk that you’re an unhealthy person.
Don’t Use Your Home & Auto Insurance agent for Your Life Insurance
You may love the guy that insures your home and auto. You may go to church with them. You may sing in the choir together. This person may even be related to your second cousin by marriage. But if you want a better price on your life insurance, go shopping with an independent agent that doesn’t sell property and casualty insurance. If you’re asking yourself if you have the best life insurance or the most coverage for the premium, steer clear of the company that insures your home or auto. This isn’t mean at all as there are some great property and casualty companies out there. But by in large, home and auto companies do a horrible job on life insurance premiums. Here’s the thing, your local home and auto guy doesn’t have to be competitive on price because he’s typically the guy you’re likely to talk to first. But home and auto companies sell life insurance as an ancillary product. It’s just a side job for them to increase their bottom line. As a life insurance broker, I can write insurance with many home and auto companies but they seldom make the top ten on the quotes that I run. Learn to separate the two early on in your life and you’ll save a great deal of money. A legitimate life insurance company will generally underwrite circles around your home and auto guy. Even in situations where the underwriting is the same, life insurance premiums are still cheaper. Don’t let them tell you that you’re getting a better deal after you “bundle” your coverage as most companies are typically saving you only about 1-2% on your auto policy only. Let the home and auto guys write houses and cars and let the life insurance companies underwrite lives.
If you have any questions on the prices that you’re seeing, just shoot me a quick email, text, or call. I love being the second or third guy you talk to as I routinely come away with a new client. If you have a competitive premium and good insurance, my promise is that I’ll let you know up front. I’ve been an independent life insurance broker and agent now for going on five years. I’ve made it my goal to get my clients the best. Sometimes that requires admitting that they already have it.
— Sam Price