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I need life insurance, but how much should I apply for?
This is one of the most common questions an independent agent hears on a daily basis. How much of a face amount to apply for is the starting point of the whole process. Careful thought must be given to be able to purchase enough but not be overinsured. Being overinsured, leads to higher premiums that you don’t need to be spending every month. Being careful to purchase enough coverage will allow your survivors to avoid any type of financial hardships. This could easily happen if your income suddenly stopped.
What life insurance company should I apply with?
There are well over 40 highly rated life insurance companies in the United States to choose from. Independent insurance agents usually use most of them. The key is to use the company that will fit your specific profile the best. Your profile with revolve around a number of areas of information such as:
- How is your height and weight ratio such as being overweight or obese?
- Do you use tobacco products such as smoking cigarettes or cigars?
- Have you been diagnosed with medical conditions such as high blood pressure?
- Do you have a dangerous occupation where you could be possibly killed on the job?
- Are you involved in any hazardous sports where you could be injured or killed?
Choosing the correct company for your specific lifestyle is very important. It is usually the number one factor when looking for the best life insurance rates.
Do I have to take a physical examination and a blood test?
Most people don’t relish the idea of having to take an exam along with a blood test. If you really want the get the very best life insurance rates. Take the test and get the lowest premiums possible, it will be worth it in the long run. All independent agents are contracted with companies that offer No Medical Exam life insurance also. These plan designs do not require a Para-Med exam but the usually come at an additional cost. The conventional fully underwritten term life insurance plan design will still be the cheapest.
What type of insurance should I buy, Term or Whole life insurance?
There are three main types of life insurance policies in an independent agents arsenal of products such as:
Term insurance is by far is going to be the most popular and cost effective of the three types of policy designs. Whole life is a permanent plan design that is used on a limited basis because of its cost. Many companies dropped Whole life from their product line years ago. Universal life is a permanent product that works very well if someone wants to have life insurance for the rest of their lives which is a great idea. You can also have a combination of term and universal life to make the perfect portfolio.
What will my new life insurance policy cost a month?
Many things come into play when looking at a potential monthly premium. Here are some of the cost factors that will effect your premium:
- Overall health history (pre-existing medical conditions).
- Height & weight (body mass index).
- Your occupation (if hazardous).
- Driving record.
- Credit history.
- Prescription drug usage.
- Parents & siblings life longevity.
- Traveling abroad (in hostile countries).
- Dangerous hobbies or sports.
All of these types of questions will appear on a life insurance application and they will all be taken into consideration.
Activate our websites quoting tool and see first hand what the rates would be for the plan design of your choice
Instantly compare rates from over 40 of the top rated carriers in the nation. The side by side comparisons you are going to view has helped lower premiums because of the strong competition these quote engines have produced. Every carriers rates are in plain view for every consumer to see.
What about reducing my premiums
One discount you may be able to achieve is by using rate bands to your best advantage. Independent insurance agents use these all the time to help get the lowest rates for their clients. Here is a simple example on how they work. Many times people will ask for a face amount of $200,000. There will be a rate band discount when a face amount begins with $250,000. This means that if the agent quotes the client at $250,000 instead of the requested $200,000. The total premium will actually be less while at the same time picking up an extra $50,000 in coverage at the same time.
This same principal works for other rate bands beginning at $500,000 and $1,000,000 also. This is a form of buying in bulk or in other works getting discount rates for the more you buy. The rate per $1,000.00 in coverage is reduced and can add up into a very reduced premium rate.
Having multiple policies at the same time
This brings up the subject of “laddering policies” to save money. Many times people will have the need for a specific face amount, which we will use $1,000,000 for the example. They may need this life insurance for 30 years but the bulk of the face amount will only be needed for 20 years. You can purchase two or more policies with staggered term periods and face amounts.
A quick example would be where an individual needs a grand total of $1,000,000. This individual has a mortgage which will last for 20 years in which this debt will drop off. In this example this person could purchase two policies. One policy for $500,000 for twenty years and then another for $500,000 for 30 years. After the first 20 years, the 20 year term policy drops off leaving the other policy to stay in force for another 10 years.
It will be much cheaper to do this that have one policy for $1,000,000 for a full 30 years. The shorter the term length is, the lower the term insurance premium will always be.
Purchasing permanent life insurance
This is somewhat of a spinoff from question number 4, but I want to make sure you understand what your choices are in permanent life insurance. A very large percentage of people always ask about whole life insurance. They want life insurance that will last the rest of their life. Whole life will last the rest of your life but the premium is much higher than term. It is so much higher that it is not cost effective at all for most people. This is a permanent product that has a very strong cash value build up. The cash value feature is what makes the overall premium so high. Whole life could easily be ten times the premium of term insurance.
Universal life on the other hand is also a permanent product but has a much lower premium. It does not have this huge emphasis on cash build up like Whole life does. I recommend Universal life with no cash build up feature built in if you want permanent life insurance at a much lower premium. Universal life will still cost in many cases over double the cost of any term product. Universal life is very affordable if purchased at a young age. Most people unfortunately wait too long to get life insurance.
Loosing weight & stopping tobacco use
Many people that I speak with are overweight or use tobacco products. Most people don’t know that if they purchase life insurance with higher rates due to their weight or smoking. They can contact the company for reconsideration after they lose weight or stop smoking. The companies will normally reconsider the individual one year after they have lost weight or stopped smoking. They can then change the health classification which will lower their premiums on an already in force policy.
The life insurance company can actually reduce their premiums if a positive change has been made. Smoking in itself can triple your rates which will produce a very high reduction in weight if the person stops smoking and stays off of tobacco for at least a year.
Never purchase guaranteed issue life insurance
Anytime you purchase life insurance that has guaranteed insurability, you are going to pay through the nose. Guaranteed issue life insurance should only be purchased by people who have serious health conditions that prohibit them from purchasing conventional coverage. These policies are very expensive and should only be purchased if there is no other choice in the matter.
If you do have medical conditions, sometimes purchasing a No Medical Exam policy may help, but as I just said that is just sometimes. Conventional fully underwritten policies are almost always the cheapest way to go.
There you have it!
If you have any questions concerning life insurance don’t hesitate to contact us. We offer no cost, no obligation help 7 days a week. Life insurance is actually a very simple form of insurance. If you find it confusing, you need an experienced independent insurance agent to help you and answer all your questions. If you decide you would like to apply, we offer quick and easy telephone applications.
All the best,