Life Insurance Discounts

Friday, August 3, 2012

If you are the head of your household, the stay-at-home parent caring for your child(ren), or one of the two breadwinners in a dual-income household, then life insurance is an important consideration for you. Life insurance pays your survivors in the event of your death. This compensation can cover your lost income as well as expenses to replace the “services” you provide in your home (paying the wages of a nanny or au pair, for example, if you were the primary caregiver).

Life insurance can also be important to the families of retirees, to pay final expenses and estate taxes; to single adults, to cover outstanding debts; and to small business owners, to cover any financial losses the business might incur due to the death or to hire a replacement.

Two questions you need to ask yourself when purchasing life insurance are (1) How much will my family need to continue living the lifestyle they are accustomed to? and (2) How much will be needed to cover my outstanding debts plus my funeral costs? The answers to these questions will change as your life goes on, so it is important to review your life insurance policy regularly to ensure it continues to meet your needs. (Small business owners need to take a variety of issues under consideration and should work with a financial or insurance expert to determine the amount of coverage needed.)

These tips can help you get the best rate for your life insurance policy:

  • Compare rates and policy types. As you shop for insurance, be aware that there are permanent and term policies. Permanent insurance will provide coverage throughout your lifetime and includes a savings component that increases the policy’s cash value over time (you can receive this cash value amount upon surrender of the policy or take loans against the value). Less expensive than permanent, term life insurance provides coverage for a limited, specified period of time – typically 10, 20 or 30 years – and has no cash value. You can compare rates online or call several insurance companies to get quotes based on the type and amount of coverage you would like. Rates can vary widely from provider to provider, so time spent up front comparison shopping is a wise investment.

  • Include only the benefits you need. Sometimes complete protection means adding some riders to your policy – that is, additions to the policy that provide extra coverage. At other times, these riders are just a way of driving up the cost of your life insurance policy. Agree to riders only if the additional coverage is something that (1) you are certain your policy doesn’t already provide and (2) your survivors will actually need.

  • Don’t smoke. One of the first questions you will be asked when you request a life insurance quote is whether you smoke. That’s because smokers 'life expectancies are much shorter than nonsmokers'. You could pay twice as much for your life insurance if you smoke. Heavy drinking is another red flag for insurance companies – a reason for labeling a policyholder “high risk” and raising his or her premium.

  • Adopt a healthy lifestyle. Exercise and healthful eating contribute to your long-term health and well-being. Life insurers may provide preferred rates if your health risk assessment – a series of health and lifestyle questions – confirms that you lead a healthy lifestyle and maintain good health.

  • Secure your life insurance policy while you are young. The older you are, the more your life insurance policy may cost. Especially after age 60, policyholders pay much higher premiums.

  • As you plan for your survivors’ security through life insurance, you might also want to consider mortgage insurance if you have not yet paid off your house. Mortgage insurance pays your outstanding balance upon death or disability so that your family is not left with this financial burden.