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Top
Ten Tips... |
Top Ten Money Saving Tips
2006 has just begun, and the time to protect your family's future
couldn't be better. Term life insurance is the most affordable way
to do this. See below for our top ten ways to help you save money
when purchasing life insurance.
Buy when you're young
Many people may feel they don't need life insurance when they are
young. While your financial needs may be lower at a younger age, the
rates are also substantially cheaper when you're young. Remember,
the goal is to cover your primary assets (like your salary and house)
so that if something were to happen to you, your beneficiaries would
be able to persevere financially. The best advice is to lock in as
much protection at a young age while your health and prices are still
good.
Your “half” birthday could be costly
While some companies raise their prices based on your actual age,
most companies increase the price of their policies six months before
your birthday. It's a term called “Age Nearest” in the
industry, and that half-year price increase could really add up over
a 20-year term policy. As above, the quicker you purchase your policy
the better.
Select the right length of coverage
Everyone has different needs, and not one size fits all when it comes
to term life insurance. While it may make sense for people in their
30s and 40s to secure a 20-year term length, a 10-year term might
be more appropriate for someone nearing retirement. People who are
trying to quit smoking, for example, might be best suited purchasing
a shorter term (and then replacing it with a longer term policy when
they qualify for non-tobacco prices). Lastly, individuals who have
30-year mortgages might want to consider a 30-year term to ensure
that the house is protected throughout the period of the loan.
Check for price breaks
Companies often offer “price breaks” at certain coverage
amounts (e.g., $250,000 vs. $225,000). The truth is that many people
can actually pay less money for more coverage. Check how little your
prices increase when you increase coverage to $250,000, $500,000,
or $1,000,000.
Buy the right amount of coverage
Many agents may try to sell you more coverage than you need. The purpose
of life insurance is to “indemnify” (replace financial
loss), and what most people should be looking for is income replacement
for their beneficiaries. Independent financial planners recommend
the following rule of thumb: purchase an amount of coverage equal
to 6-10 times your annual gross income.
The right hobby with the wrong company could cost you
People who participate in high-risk sports or activities (such as
hang-gliding, skydiving, mountain climbing, scuba diving, and racing),
or even those who like to have an occasional cigar could very well
pay more money if they don't pick the right company. Every company
looks at risk factors differently and some are more liberal in certain
areas than others. Speak with a licensed insurance expert and make
sure they have all the underwriting criteria at their disposal and
match you with the right company.
Work policies aren't always the best deal
While purchasing a life insurance policy through your employer is
convenient, it may not be the best deal available to you. Work policies
are often based on a composite profile of the employees you work with,
many of whom may be less healthy than you, or have other underwriting
factors that might drive up rates. These type of policies also expire
if/when you leave the company. Inexpensive term life insurance polices
that cover your dependents until they can live comfortably on their
own are often a better alternative.
Check out your payment/billing options
Many life insurance companies offer discounts to consumers who pay
their premiums annually, or who pay monthly by electronic funds transfer
(EFT).
Review your policy often
Do a review of your life insurance policy a minimum of every three
years, if not more often. Rates may be lower, and your circumstances
may have changed, necessitating more or less protection. If you are
replacing a policy, make sure you allow enough time to get your new
policy in place so coverage won't overlap or lapse.
Don't overspend on protection
Term life insurance is the most affordable and cost-effective pure
protection available, and it is typically much less expensive than
a comparable whole life policy. The old axiom still rings true: “Buy
Term and invest the difference.”
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