When you are considering buying life insurance, you are probably thinking about the cost. Your needs for life insurance may be very different than someone else’s. You may need a way to maximize retirement income, while your neighbor may be more concerned about providing for a a special needs adult child. Life insurance is an important investment so you need to be sure you get exactly what you need. Here are three mistakes you’ll want to avoid when buying affordable term life insurance:
1. Considering Cost as the Only Factor
Of course cost is something you need to consider in life insurance, but you also need to consider the benefits of paying more for Riders on the insurance which increase your benefits. For example, Critical Care Riders allow you to take out some of your benefit in the case of a critical illness (it doesn’t have to be a terminal illness).
Another factor to consider is the underwriting policies of the insurance carrier. Some carriers have more favorable underwriting policies about certain health or lifestyle choices like diabetes or smoking. How can you find out about the differences in carriers? Talk with an independent life insurance agent. Their job is to help you find the best policy and carrier for your situation.
2. Buying the Wrong Type of Coverage
When people consider only cost, they usually buy Term insurance. If you want or need coverage for your lifetime, Term Life insurance may not be the best life insurance choice for you. Instead, you may find that a Permanent policy is cheaper in the long run.
If you need coverage for your lifetime, but buy a term policy, you have two options. You can convert to a permanent policy during the conversion period. If you don’t, your other choice is to apply for a new policy. As you age, you may find yourself in a position where your underwriting rating is getting poorer (meaning premiums are getting higher) or where you are uninsurable.
So consider carefully when deciding what type of coverage is best for your insurance needs.
3. Applying with More than One Agent or Company at a Time
Life insurance companies don’t like to see multiple applications. It may seem reasonable to you to get multiple quotes. And I would agree. But once you have your quotes, it’s time to choose one and apply to that company.
Life insurance doesn’t work like bids on a house project. If you apply to multiple carriers, the insurance company may be concerned that you will accept more coverage than you can actually qualify for.
Moreover, they may wonder how serious you are if you apply to multiple carriers. They may think, “Will you accept any offer at all?” Your best option is to apply to one company. If they don’t give you the rating you expect, then it’s reasonable to apply to another company. If you use the same independent agent, they can use your same exam, medical records and other information to make the second application very quick. You then choose the better option.
The Bottom Line
If you really want a chance to know which carrier will offer you the most affordable life insurance, you need to speak with an independent life insurance agent. An independent agent works with many highly rated life insurance companies. They will talk to you about your health and family history and steer you not only to the very best type and amount of insurance, but also towards the carrier who is most likely to offer you an affordable price.
Photo Credit: Beverly Cromer