Who likes paying more for something when you know you can get it cheaper somewhere else?
It’s a gut-wrenching feeling when you’ve paid for goods or services only to realize that you could have saved a bundle had you just invested a little bit more time researching all your options. This has happened to me when buying appliances, clothes and, most recently, term life insurance.
I had taken out three separate 30 term policies over the years as my family grew ($250,000, $500,000, and $1.5 million). I thought that I had plenty of life insurance coverage, but after our third son arrived I started to have second thoughts. I decided to revisit how much I was paying for life insurance, increase my coverage, and see if I could get a better term life insurance rates by shopping around.
Turns out that I was able to increase my life insurance coverage by $250,000 to $2.5 million and save $400 a year. That’s a pretty amazing savings, especially since I had previously taken out my last policy three years prior. By consolidating to one carrier I was able to increase my peace of mind for my family and put a little back into my checking account. Win!
If you want to save on your life insurance, here are the steps to follow to make sure that you’re getting the best term life insurance rate possible.
1. Avoid Captive; Go Independent.
I’m sure you’re very familiar with State Farm commercials and their jingle,”Like a good neighbor State Farm is there.” State Farm might be a good neighbor and they might be able to offer the “Discount Double Check,” but it doesn’t necessarily mean they’re going to give you the most affordable rate on life insurance.
Captive agents such as New York Life, Northwestern Mutual and others may attempt to sell you on the fact that they can get you the cheapest rate, but in my experience that is not the case. I had one client that was paying almost $1,400 a year for his 20-year, million-dollar term policy with New York Life. When I gave him some quotes from some of our top carriers, it turns out that he could get the exact same policy for $800 a year; over a $600 per year savings. That’s significant, and all he had to do was perform his own “Discount Double Check“.
When buying life insurance I can’t stress enough to go to an independent agent — and I don’t mean an independent agent that’s backed by a specific life insurance company. For example, you might have a life insurance agent that works for MetLife that can also offer other types of insurance companies. They may have ulterior motives by offering the MetLife product first.
Note: I’m not trying to diss MetLife … this is just an example. I’ve heard of countless examples when an agent claims to be independent, but they can only offer five or six different carriers. Find a truly independent agent that can work with dozens of different carriers if you truly want to get an accurate term quote.
2. Understand Your Health.
The biggest factor that’s going to drive the amount you pay on your life insurance is how healthy you are. If you’re a 35-year-old male that’s 6 feet, 2 inches tall and 375 pounds, you’re not going to get a preferred plus rating. I don’t care how healthy you think you are.
Another news flash: If you think you’re healthy because you haven’t see your doctor in three years because you haven’t had a need to, the life insurance company is going to strongly disagree with you. They want to make sure that:
- You are healthy; and
- You have had checkups from your doctor verifying so.
If you’re applying for term life insurance rates and you have some sort of high-risk conditions such as high cholesterol or sleep apnea, the insurance company is going to want to know all the information they can about it, such as:
- When were you diagnosed?
- When was your last checkup for the condition?
- How severe is it?
- Do you take any medication?
- Has it caused any other medical problems?
Having all this information up front is going to make it that much easier for your independent agent to place you with the right carrier. All insurance companies have different underwriting procedures. While some may decline you immediately for having a severe case of sleep apnea, another company may give you a standing offer. That’s why it’s important to know what’s going on with your health and to be able to relay that to your life insurance agent.
3. Don’t Be Lazy About the Medical Exam.
Television commercials are becoming much more abundant that boast “how to get life insurance with no exam.” These policies are becoming much more commonplace with a society that’s all about getting things done fast. While I do offer these type of policies for individuals that do need fast life insurance, you must realize that by avoiding the life insurance exam you’re going to pay that much more. With a little homework, you can be sure you are getting the cheapest possible life insurance rates.
Think about it: If a credit card company would issue you a credit card without running a credit check, they would have to charge a higher interest rate to account for the risk. The same concept applies with life insurance. By bypassing the medical exam, they are inheriting a much larger risk, so they have to charge you more to compensate.
A life insurance medical exam consists of getting your blood drawn and having a urine test. A traveling nurse will come to either your home or your place of employment and meet you at a time that’s convenient for you and your family. If you don’t mind needles and have the patience, avoid the life insurance with no exam policies and go with a traditional term policy.
If you have loved ones that depend on you, life insurance should not be an afterthought. You may have paid more for that household appliance that you should have. Don’t make the same mistake about your life insurance policy.
Do you have tips for finding an affordable life insurance policy?