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  • Tips for getting the best deal on life insurance
  • January 16, 2014
  • buying life insuranceBy

    When it comes time to purchasing life insurance, there a number of policies available that can match your needs without hurting your pocketbook.

    Life insurance companies price their policies very competitively, so if you do your homework and keep your options open, finding a good deal could be easier than you think.

    Here are some common tips you can use to reap savings on life insurance:

    1. Know your options

    There are specific policies that fit your needs and others that do not. This makes choosing the right policy more important than you might think.

    For example, term life insurance is ideal for families who are just starting out and need cover for a specific amount of time while permanent life insurance is ideal for those seeking additional tax-privileged savings components.

    “Term insurance is initially the least expensive form of life insurance you can buy,” said Brian Ashe, CLU and spokesperson for the LIFE Foundation. “A young family just starting out can get a lot of term insurance for a relatively low premium.”

    If you decide that term is the best policy for you, you might want to think about purchasing a policy with a “guaranteed renewal” or “annual renewable” term. This means that the policy automatically renews on it’s own and you won’t be required to take another medical exam.

    “If your desired length of coverage is generally longer than 15 or 20 years, permanent insurance looks very attractive from an economic standpoint,” Ashe said. “You may also want to flip over to a universal life policy where you would have the opportunity to level out premiums and build cash values.”

    Since there are so many policy options and variations of those policies, it is advisable to consult with a certified insurance adviser before making a decision.

    2. Window shop

    There is a number of ways you can shop for life insurance, for example, directly from an insurance company, through a licensed agent, by mail or over the Internet. If you aren’t satisfied with the cost of insurance at one company, you can easily check out other policies at other companies to see who has the best deal for your budget.

    3. Consider employer-sponsored life insurance

    Group life insurance or employer-sponsored life insurance is often a better bet when it comes to saving money. Since employers subsidize insurance costs, it can be much less than an individual life insurance policy you might try to get on your own, especially if you smoke or have a preexisting medical condition.

    But if you are young and healthy and don’t smoke, you are paying premiums that are subsidizing the older, sicker workers in the group, so it’s possible to get a better rate for a policy you seek out on your own.

    Also, if you have a preexisting medical condition with a group policy you rarely have to provide evidence of good health to a group insurer. However, if your group life policy exceeds $50,000, the IRS considers policies over $50,000 as taxable income.

    4. Maintain a healthy lifestyle.

    This should be a no-brainer, but when it comes to evaluating your mortality risk, living a long and healthy life will provide you with top-notch insurance premiums. If you don’t smoke this can mean extra money in your pocket when it comes to saving on life insurance premiums.

    “There are many variables – age, product, underwriting classification when it comes to smokers rates. At ages 35, 45 and 55 for a $1 million policy with a 20-year term, the nicotine premiums average about 2.5 percent higher than the non-nicotine rates for individuals who qualify for standard and preferred categories,” said Chris Graham, Vice President and Chief Underwriter for The Hartford.

    Profile for preferred rates

    – Nonsmoker
    – No pre-existing medical condition
    – Blood pressure is less than 120/80
    – Total cholesterol is below 200 and LDL that is below 100, (recommended by the American Heart Association)
    – Body Mass Index (BMI) is between 18.5-24.9 (normal weight according to National Heart Blood Lung Association)

    5. Let your agent know if your health statue has improved

    If you’ve had a heart attack and are now seeing a specialist and have made significant lifestyle changes — such as quitting smoking or drinking, started exercising or have your weight under control– tell your agent. Anything that improves your health status should be documented and given to your insurer.

    If you’re medical history has improved and you’ve established a timeline of positive health status results, this could easily win you a better rate when your policy is up for renewal or you evaluate your insurance needs.

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