We all know that we should have insurance. For most people, term life insurance is definitely the best choice. Since most of your insurance needs are timely, you don’t need to get permanent life insurance coverage through a whole life policy. Term life insurance will cover your needs for the time you really need it.
There is something I find very frustrating when it comes down to selecting an insurance company. The problem is that once you have calculated your insurance needs, you still need to shop around to get the best term life insurance quotes. While getting term life insurance is relatively easy, saving on the premium could be a complex task.
You might not know this, but most insurance companies have specialities. They concentrate on specific niches (such as life, travel and health insurance, etc) in order to master their markets. They may offer all kinds of insurance products, but each company will offer their best deal in a selected niche. This is why it is very important to shop around to get the best term life insurance quote. Not all companies are competitive in this market. So before your sign your term life insurance contract, check out these tricks to get the best quotes possible.
#1 Identify Your Insurance Needs Correctly
It is not true that all people need the same amount of life insurance. In fact, each case is different. I’ll go even further than this; if you are a couple, both of you don’t need the same term life insurance. You need to assess your insurance needs correctly. Here are a few guidelines:
- Make sure you have enough coverage to pay for all your personal debts (mortgage included).
- If you have children, make sure you have enough money to replace your income until they turn 20.
- If your spouse makes less than you do, make sure you consider this in your calculations.
- If you have short and long term debt, get 2 term life insurance policies (one for short term needs and another for longer term needs).
#2 Don’t Ask For More Term Insurance Than You Need
Some people think that the more they are insured the better. Unless you want to play Santa Clause, this is not necessary. Therefore, don’t go for the huge $2M life insurance policy if you don’t really need it. Term life is way cheaper than whole life insurance. But it’s not a reason to exceed the coverage you need. Some insurance brokers will offer to cancel your whole life insurance policy and change it for term life insurance. Then, they will offer that you to pay the same premium to enjoy a higher coverage. This sounds like a deal, right? You pay the same price, but increase your coverage! However, if you don’t need more life insurance, you are paying more for nothing. Make sure to refer to trick number 1: assess your insurance needs correctly!
#3 Keep a Healthy Body & Healthy Credit Score
It’s obvious that non-smokers get better term life insurance quotes than everybody else. However, did you know that people with a high credit score get even better quotes? Life insurance companies have made this statistical link some time ago: people with their credit scores in order are more likely to be responsible. Therefore, chances are they will take less risk, be less stressed and even less likely to harm their health. I know that it’s not true that a strong credit score automatically increases your life expectancy. But on a purely statically point of view, the odds are that people with a high credit score, are not only responsible with their money, they are responsible individuals, period. This I why taking care of your credit will likely bring you better term life insurance quotes.
If you look for an important amount, you will be required to take a health test. If you eat healthy and go to the gym, you might benefit from an additional “super healthy individual” rebate. Depending on how you score on your health test, your premium may be lower (or higher!). Warning: most insurance brokers will bring you the good news as follows:
“Congratulations! You are part of the X% of healthy individuals. Since you have a great health score, we can insure you for $50,000 more for the same premium”
The broker will try to keep the same premium and simply increase your amount of coverage because his pay check depends on the price of the premium and not the amount covered by your contract. If you calculated that you need a $750,000 term life insurance policy, why would you want a quote for a $800,000 contract? Ask your broker to keep the same contract and lower your premium instead.
#4 Consider the First to Die Option
This trick is for couples and partners only. If you are more than one individuals to get insured, you can decide to receive only the amount once. In other words, you have 2 people on the term life insurance contract, but the company will only pay upon the first death. Here’s a quick example:
My wife needs a $500K of 20 years term life insurance policy and I need a $1M 20 years term life policy. The reason why I need more than her is because I have a higher salary. Therefore, if I pass away, she will need more money from the insurance policy to keep her lifestyle with our kids. From this situation, we have two options:
a) She gets a $500K individual term life insurance and I do the same for $1M
b) We get a $500K together for a first to die policy and I get a $500K individual term life contract
The second option might cost less than the first option. The rationale is simple. With the first option, if we both die while we are covered, the life insurance company will have to pay $1,5M. In the second option, she will only pay a total of $1M. If I die first, the insurance company pays the $500K from the first-to-die policy and the contract ends. If my wife dies 2 years later, she is not insured by this policy anymore. Since the risk payment is smaller with the second option, you can surely get a better term life insurance quote.
In the end, if we both pass away, our kids will probably have enough with $1M and they probably don’t need $1,5M. This is actually the calculation you need to do prior to select the first to die option.
#5 Use the Internet for Your First Search for the Best Term Life Insurance Quote
Meeting with an insurance rep can be annoying and you might want to get your head around the topic first. If you hate pressure and don’t want to have to say “no, thanks” after the first meeting, searching for the best term life insurance quotes from your computer may be a great idea. You can get a first draft while sitting comfortably in front of your computer. Nobody to talk to, no hassles, just the info you are looking for in 5 minutes!
This is a great start when you want to shop for life insurance. It will give you all the information you need very fast and then can meet with an insurance broker if you don’t feel comfortable giving your personal information over the internet. At least, getting your first insurance quote will give you an idea of how much you might pay.
The internet quote agencies are using basic data (such as age, sex, and smoker status) and provide you with term insurance quotes from several insurance companies. You can then compare and see which policy meets your needs. Then again, you can always print this information and go see an insurance broker. Don’t tell him that you have been doing research prior to your meeting, this will be a good test to see if he can bring you the best term life insurance quote or if he can only think of his own wallet and pick the one with the best commission! I’ve recently tried Quote Guardian and really liked how I got life insurance quotes in 5 minutes from highly trusted insurance companies such as AllState, Farmer’s, State Farm and NationWide.
This post has been part of the Life Insurance Movement @ Good Financial Cents. Because Life Insurance Does Matter!