Life insurance should be shopped for with great due diligence because most of the time it can make the difference between your loved ones thriving vs surviving.
Most people know that life insurance is a complicated product but the great news is that if you follow some of our tips in this article you will be on your way with knowledge on how to shop for life insurance like a pro.
By determining your needs, picking the right agent/agency, checking company credentials and being upfront about your situation, you will pick plans just like the professionals who sell them.
Let’s cover some helpful tips and things to look out for.
Decide What You Need
Amount of Coverage
Before asking for any life insurance quotes make sure you, along with your agent do a thorough needs analysis. Needs analysis is a very detailed way of calculating the exact amount of life insurance you should have in force to ensure that your beneficiaries can continue living with no worries even if you are not there. After all, this is the true purpose of life insurance right? If your agent doesn’t start out with needs analysis, that’s a red flag. For those that are still playing around with quotes, a good rule of thumb is 10 to 15 times your annual income. So if you are making about $50,000 per year you’ll want to get a policy ranging from $500k to $750k in order for your family to be okay.
Type of Life Insurance
After finding out how much coverage will be adequate, the next step is to determine the length of coverage you need. This entails figuring out whether term or permanent life insurance is your best option.
Term Life
If you require a large amount of life insurance during working years, to cover such things as a mortgage, college education, or any other temporary financial responsibilities, then term life insurance would be your ideal coverage. For example, if you’re a 35-year-old female with a mortgage and small kids, a 30-year term policy will ensure that you will be covered until you reach retirement, your mortgage is paid off and your kids are all grown up.
Term life insurance can range from 1-year renewable term to sometimes 30 year term period depending on the company. Term expires after the set period of time that you purchased it for and the premiums will increase after the term is complete. Term life insurance is the most affordable life insurance, so when you hear those radio/tv ads for $10 monthly payment for $500,000 it’s most likely a term life policy.
Permanent
Now let’s say you don’t like the idea of a temporary coverage or want to get a guarantee knowing that your family won’t have the burden of paying your funeral. Then permanent life insurance is your best option.
Permanent life insurance coverage is also known as whole life, universal life, and variable life. Don’t let all this confuse you as these are just different types of permanent life insurance. They are distinguished by their structure, purpose and how they treat the premium that you pay.
Most of our clients, however, usually look for pure death protection. That’s why we usually recommend the guaranteed universal life insurance product, also known as GUL. The reason is simple, in most cases, this policy will provide a fixed payment that will not increase and your policy will stay in force till age 100 and in some cases age 121(perfect policy for optimists). This is the most affordable permanent pure protection coverage one can acquire on the market.
Permanent plans are also popular for building up savings through cash value accumulation, which is where a portion of your premium goes and gets invested for interest return. If you have a large enough capital build up, it can be used for small emergencies or to supplement retirement income.
Where to Buy
Being a consumer today is wonderful because you are now in charge of what company should get your business. This can also be a downfall as it can be a bit confusing when there are too many options, so let’s discuss the best way to purchase a policy.
There are several different avenues of purchasing life insurance but whether you go directly to a company or deal with an agency there will still be an agent in between unless of course, you apply entirely online which is rare for most companies. We know we’re going to use an agent one way or another, so let’s see the difference between the types of agents/agencies.
Captive agents
Captive insurance agents are agents who can only offer the product of the company that they represent. Typically if you work with a company like New York life, State Farm or Primerica it won’t take long to discover that they are allowed to sell only that company’s products. Captive agents can also be the internal call center agents you get on the line when you call an insurance company direct. A huge downfall of captive agents is that if you get turned down they will not be able to use same data collected to reapply for other companies.
Independent Broker
This is the type of an agent you should be using for maximizing your savings and also getting a plan that really suits your needs. Independent brokers are not tied to any one company and have the ability to shop around plus compare rates with multiple companies. Since life insurance rates are fixed by law you would be doing yourself a disservice by not using an independent agent/agency.
Now while it is better to work with an independent agency not all of them have your best interests in mind or represent the company that would fit you best. So here are some things to look out for. Let’s list some bullet points to follow:
- Run the quotes while you are on the phone with them to make sure you are getting the best rate. A practice we’ve grown accustomed to is giving clients screen share presentations, which can easily be done with internet access so you can see what your getting. This service is free so we encourage you to require this from an agent that you work with.
- Verify they are truly independent by making sure they really do work with a large variety of big companies. The minimum should be at least 15, but as the saying goes, the more the merrier.
- Go with an agent who is there for you after the sale to answer any of your questions and conduct annual reviews to ensure you always have adequate coverage. If an agent provides great after sale service it can be assumed that they are trying to build lifetime relationships with their clients so they will try hard to make sure you are pleased.
- Last but not least, use your gut. When speaking with an agent make sure they are knowledgeable, friendly and upbeat. You as a client can tell if a person is sincerely trying to aid you or is just another pushy salesman worried about his next commission check.
Picking a Company
So we know what we need; now we have to make sure the life insurance company that we pick has the ability to write a check if anything was to happen to you.
- Check their rating with A.M. Best, which is a rating agency that specializes in grading insurance companies for over 100 years by their financial strength and ability to meet contractual obligations. The ratings range from A++ to F. For more information on ratings or to look up a company feel free to click on this link: A.M. Best’s
- Check how long the company has been in business as this will demonstrate their stability and experience. Most big companies have been in the business for over 100 years plus.
- Google the company’s existing or previous policyholders reviews to make sure they practice what they preach
Following the tips above will help you secure a policy with a company that will be there. If you really want to make sure you are in good hands cross check company ratings with other rating providers such as Moody’s, S&P and Weiss. You also might want to check that company’s reinsurer. Last but not least check out their management along with investment returns and investment strategy.
Sounds like a lot of work? That’s because it is, we always recommend getting an experienced agent to do this for you.
Be Honest
As we mentioned earlier agents need to be transparent, it is also as equally important for you to be upfront about your health, hazardous habits, and your background. This will save you time and money because the agent might recommend a carrier based on the information you provided. In addition to that, you don’t want to give the company anything to come back to if there is ever a claim filed since it can be deemed fraudulent.What you should keep in mind is that the lowest rate on the quote engine isn’t always the company that will give the best rate for your condition.
For example, someone with a history of prostate cancer or a felony might get declined with most carriers but American General would issue a policy if the criteria are met. Also from our experience, the life insurance companies are able to get a lot of information on you from Rx reports, doctor’s notes, MIB and of course your lab results if the company requires a medical exam. So its best to be upfront with your agent so they can work on your behalf.
As you can see a lot goes into buying life insurance but if you’ve read this far into it you are most definitely ready to make an accurate decision.
Let Us Help
Here at InsureChance, we work with over 60 top rated insurers to ensure we get you the best rate. This also allows us to know which niches particular carrier has and increase chances of approval for our clients with pre-existing conditions. We also provide lifetime support to all our existing clients so if you ever need to make changes to your policy or get the additional coverage you can rest assured we got your back. If there is anything that we missed feel free to call us at 888.492.1967 for questions and suggestions or Compare Rates Online.
