I love them because they offer a very inexpensive way to provide instant protection for my family. I hate them because they manufacture other insurance products that rarely do any good for anyone other than the insurance company and its agents. They often sell junk that robs consumers of their money and leaves them woefully underinsured.
They should be ashamed of themselves for this. But let’s not throw the baby out with the bathwater, friend. Assuming you do need life insurance, here’s how to save serious dough.
Do you really need life insurance? Maybe not. If nobody depends on you financially and nobody is ever going to look to you to support them, why buy life insurance? On the other hand if there are people who rely on you, life insurance is a must in my opinion.
You might love your insurance agent, but that doesn’t mean she has your best interests at heart. Understand that some agents can only sell you the life insurance their company offers. Other agents broker for a variety of companies. You want to work with brokers who represent many different companies. This is even more important if you have a health problem and need life insurance. Just ask your agent what companies they work with before you go too deep into the process with the agent.
Go with term life insurance
If you are 20 to 39 and you need life insurance, it’s likely because you want to protect your family against the risk of your premature death. If that’s the case you will get between seven to 10 times the protection for every dollar you spend on term rather than whole life. There are a variety of reasons for this, but suffice it to say that if you want to obtain the most coverage for the least cost, term life insurance is for you.
Life insurance is not for kids
If you have children, don’t let some slick insurance agent crowbar you into buying life insurance for the kids. Life insurance is a tool that is meant to protect people against a financial loss. Your kids don’t need life insurance because they have no income. While losing a child is a loss greater than words, life insurance for kids is almost always a waste of money. Save the premiums and invest for college instead.
Getting the right amount of life insurance
By far the greatest way for you to save big bucks on life insurance is to buy the right amount for the right time. Term life is super cheap while you are young. Figure out how much you need and get it. Stop thinking about it and just do it. But keep in mind that by the time you are 60 or 70, you probably won’t need as much life insurance — if any at all. Hopefully by then your assets will grow and your financial responsibilities will decline.
I started buying life insurance the day my eldest daughter was born. I bought more every few years as my family grew and as our spending increased. But each time I bought more insurance, I bought it for a shorter term. If you are 35 now, you might buy a 30-year policy. Then, when you are 45, you might buy a 20-year policy. That keeps the cost down and the coverage high. This kind of insurance plan assumes that you won’t need the coverage once you reach age 65 (because you’ll cut back on spending and have a fully-funded retirement account).
Your approach will probably be a bit different. But the point is to tailor a life insurance strategy based on your needs –- not the needs of the life insurance agent. Figure out how much you need and how long you need it. Then, shop around with a variety of companies who offer you term insurance and stay away from the sharpies who push whole life and/or insurance for children.
These are the four best steps you can take to save serious cabbage on your life insurance. What is your life insurance approach? Are there other tips you can provide to help us?