Life Insurance Shopping 101

January 13, 2010

If you’re like most people, you see those television commercials selling life insurance to people between the ages of fifty and eighty and you pretty much blow them off. If you’re particularly technologically savvy, you might even use your DVR to watch all television, so you never have to see those commercials at all.

While it’s true that you shouldn’t buy insurance – any insurance – because of a television commercial, life insurance actually is a good idea, so here are some tips to help you shop for it:

  1. Time is Money: If you’ve ever wondered, When should I buy life insurance? Your answer is “Now.” Insurance companies round up your age – a 39-year-old will be priced as if she’s 40 – and premiums rise as you grow older, so it’s always the best plan to buy early – ideally in your late 20’s – to lock into the best possible rate.
  2. Research Counts: Before you ever speak with an insurance agent, do some research on the types of policies you’re considering, and on the companies you might want to buy from. Then ask for quotes from more than one company, and compare them closely – making sure you’re getting the coverage amounts you want for a price you’re willing to pay. Don’t let a pushy sales agent talk you into more coverage than you need, and be sure to ask questions if you have them.
  3. Pay Annually: If your finances allow it, try to pay your annual premium in one lump sum instead of making installments. You can save up to 20% by doing so. If this isn’t possible, opt for paying via EFT (electronic funds transfer) as many insurers offer a discount for electronic payments.
  4. Be Honest: No pun intended, but honesty really is the best policy. Yes, you’ll have to pay a higher premium if you haven’t kicked the smoking habit yet, but tell the insurance agent anyway – if you don’t you run the risk of having your policy canceled. If you have other health issues – high blood pressure, for example – be sure to visit a doctor and get it resolved before your medical exam. No-exam insurance is available, but it’s much more expensive.

If you’re really uncertain about whether or not you need life insurance, consider whether or not your family will be placed in financial jeopardy if you were to die. If the answer is yes, start shopping today.