Term policies are often the most cost-effective life insurance option, but among the sea of life insurance carriers out there, how do you find the most affordable term life insurance policy for your age and health? Here are five tips to help you in your search:
1. Don’t rely on quote engines
Quote engines are good for getting a very approximate idea of how much a life insurance policy will cost you, but they don’t take into account many of the variables that will impact the actual cost. If they did, no one would ever complete the form- it would be too long!
Although the prices you see on a quote engine are real quotes, you must remember they are only taking partial information into account. It always takes an underwriter at the insurance compnay to approve you for coverage before a policy can be issued. The cost may be the same as you saw on the quote engine, but it may not.
Remember, the quote engine is only as good as the information you put into it.
2. Work with an independent life insurance agent
Independent life insurance agents represent multiple carriers and have the experience and expertise to guide you to the most affordable term life insurance among those carriers. Your agent can discuss your medical issues with you and get a better understanding of your health. Insurance agents have access to more insurance carrier quotes than you could find yourself on the website.
For example, perhaps at a recent doctor visit it was discovered that you had high blood pressure. What course of action did you take- change in diet or medication? Is your pressure controlled with your diet change? Or is it still high? Is your pressure still high in spite of being on medication? Or is it controlled? Do you follow your doctor’s advice? It’s pretty obvious that different answers to these questions would result in a difference in your underwriting rating.
A quote engine can’t get this detail, but an independent agent can. And if your agent isn’t sure how an insurance company will most likely rate you, they can check the guidelines and/or talk to their independent underwriter (if they have one available). Our independent underwriter is invaluable when it comes to assisting us with applicants. She helps us understand the implications of their medical conditions, helps us better explain issues to them and tells us which carriers will treat the issue most aggressively (that’s a good thing!).
With an independent agent, you’re a valued client—not just another faceless visitor to a website.
3. Be honest
You won’t be able to hide smoking or other medical issues from the insurance companies, so it makes sense to be completely honest with your independent agent. Besides knowing the best company(s) for you to apply to, the insurance agent can send a cover letter in with your application which will put your “issue” in the best light. This is another area where having access to an independent underwriter can really help a client. The underwriter knows what the insurance company is looking for and can help with the cover letter!
As we all know it’s better if the insurance company hears from you about the issue. When they find things out from other sources, they may begin to wonder what else you aren’t telling them.
4. Be realistic about your budget
“Affordability” varies. If you can’t pay for it, it’s not affordable! Take a hard look at your budget and your expected earnings over time and determine what’s a realistic affordable term life insurance premium. You may have to shorten the length of the term and/or reduce the amount of the death benefit to get a premium that you are comfortable with.
Remember, you are planning on paying this bill for a long, long time! Even if you can only afford less coverage than you ideally want, isn’t it better for your family to have some protection, rather than none at all?
5. Don’t buy more than you need
Many times people overestimate the amount of coverage they need. It’s certainly better to have more than enough coverage rather than not enough. However, if your budget is tight, make sure you let your agent know right away. They can work backwards to figure out how much coverage you can get to fit your budget.
We remind you to be realistic (#4). If you are 60, you are not going get coverage for a few dollars more than a 20 year old. Even if you are 50 you won’t! Your age and build are the first two things that the insurance company will consider. Of course, the older you are, the more expensive your insurance will be.
The Bottom Line
There’s plenty of affordable term life insurance on the market, but finding the best deal will involve consultation with an independent life insurance agent. We strongly suggest resisting the urge to shop for that coverage without expert guidance.