6 Best Life Insurance Tips
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UPDATED: Nov 9, 2020
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Many people who are buying life insurance don’t necessarily get the best deal.
We are going to give you the scoop on how to ensure that you always get the best life insurance policy at the most affordable price.
By following these 6 tips you can save quite a lot of money on your next life insurance policy.
Life insurance is a big investment because it’s a long term investment. Make the most out of it!
Quick Guide to 6 Tips for Buying Life Insurance
- Get a Medical Exam
- Get a Screenshot of the Quote
- Layering Term Policies
- Opt for an Annuity Payout
- Don’t Give Unnecessary Information
- When to Apply for No Exam
Whether you are applying for low cost Term life insurance or opting for a Permanent life insurance policy – All standard forms of life insurance require you to take a medical exam.
The reason we suggest you see your doctor before applying is to make sure you have taken care of any unresolved issues listed on your medical records to ensure they are properly updated.
Many life insurers require a review of your latest medical records from your family doctor. If you have made any recent lifestyle or health changes since your last medical exam, you want them reflected on your medical records before you apply.
You may have been a smoker or overweight with complicating factors such as high blood pressure or high cholesterol levels. You don’t want to be unnecessarily penalized by a life insurer, especially if you’ve made progress in regard to improving your diet, starting a healthy living regimen or quitting smoking.
The more positive you can make your health profile appear – the better you are rated. All life insurers rate people based on health and each rating change can cost as much as 25% more which translates into a 25% saving on what you pay for your policy if your circumstances have improved.
Why should you ask for a screenshot of the quotes your agent generates?
Unfortunately, there are agents that tend to favor some life insurance companies over others as they might be trying to send more business to a particular company.
Now, it’s not always the case that they are trying to bamboozle you, they may actually have a valid reason to do so. They may not quote the most favorable company because of something you revealed about your health or lifestyle which would prevent you from getting the best or lowest quote.
Since you’ll never know – ask the agent to email you or show you a screenshot of the quotes they have on their screen. If the quote isn’t the lowest, you may politely call them out on this to find out why they didn’t give you the best quote.
At Huntley Wealth we match you with the best company for YOUR needs and budget every time.
How do you layer term policies?
Many people figure out their life insurance needs and decide to buy 1 large expensive policy to cover everything. But you don’t necessarily need to do this especially if certain aspects of your coverage won’t be needed after 5, 10 or 15 years.
Layering your term policies means that you buy “Several Term Policies” to cover different purposes and different lengths of time. When you no longer need the coverage for the specific reason you wanted the policy to cover – simply cancel the policy.
Layering policies can save a lot of money, so let me show you a quick example.
Suppose John, who is 30 years old, figures he needs a life insurance policy that gives him $1million in coverage for a 30 year term. He breaks his life insurance needs down as follows:
- $500,000 for income replacement
- $200,000 to cover the college education of his children (he has 2 children 7 and 10 years of age)
- $300,000 to cover his mortgage, which he expects to have paid off in 20 years
Instead of 1 big policy 30 year term policy, John could save a lot of money by buying 3 separate term policies for different term lengths.
Instead, he could get:
- A 30 year term $500,000 policy for income replacement
- A 15 year term policy to cover the kid’s education, and
- A 20 year term policy for $300,000 to cover the mortgage.
The best part? He can cancel any or all of the policies when he no longer has a need for them. The cost of 3 shorter term policies will be cheaper overall than the 1 big policy!
Most people who have some knowledge of life insurance know their beneficiaries receive a tax free lump sum upon their death should they die while the policy is in force.
But, did you know that you have another choice in regard to how your beneficiaries receive a life insurance payout?
It’s called an “annuity payout”. This simply means that instead of a lump sum, your beneficiaries receive the death benefits over a period of years. Many insurers have different options when it comes to annuity payouts, so choose carefully.
Opting for an annuity payout will reduce the premium you pay.
However, if interest is included, there may be some potential tax ramifications. Check with an independent life insurance agent or financial advisor before you decide.
If the life insurance company doesn’t ask for particular information about your health, family history, or lifestyle choices then don’t tell them about it and you won’t be penalized.
Don’t volunteer any information which they don’t ask about!
For example, almost every life insurance company will penalize you if either of your parents ever had cancer. There is at least one carrier that only asks if any members of your immediate family ever had heart disease on their application.
In other words, if your father died of cancer, you can simply answer “no” and you won’t be hiding anything! Don’t add a note next to it saying “but my father died of cancer.”
The first thing you should know that even though no exam life insurance seems more convenient, most of these policies cost AT LEAST 3 – 6 TIMES MORE than policies which do require an exam.
If you are young and healthy, or even older and healthy, we would not recommend that you apply for a no exam policy if you want to save money.
We would generally say you should never buy a no exam policy unless perhaps you feel something is “off” in your body, and want to get coverage prior to seeing a doctor about it.
The only other reason should be if you have major health issues that you are certain will prevent you from having your life insurance application approved.
After all, if you haven’t been diagnosed with anything, you can honestly answer the questions on a no exam application and still qualify for coverage.
But, even if you have health issues, you should always discuss your situation with a knowledgeable independent life insurance agent before you go out and apply for a no exam policy.
Your health issue may not be necessarily as bad as you think and we might get you better rates with a policy that does require a medical exam.
Alternatively, if you only qualify for a no exam policy, we can comparison shop for you and find the most affordable no exam policy that’s right for your circumstances.