Get Expert Life Insurance Shopping Advice [Over 20 Top Tips!]

Use an independent life insurance agent

One of the most important tips answers one of the most frequent questions: Can I save money buying direct from a company or an agent? Some are shocked to find out that the price will be the same as long as you’re comparing the same products from a company.

For example, if you buy a 20 year term life policy from Company A – the price is the same if you buy direct or from an agent. Prices are fixed by law, so there aren’t any blockbuster weekend sales for life insurance.

Provide accurate information to your agent

Withholding important details from your agent in order to get a “better quote” is one of the biggest mistakes shoppers make. If you pass away and a claim is requested, but you gave dishonest information on your application, the insurance company may deny it.  

Life insurance companies use your medical exam, can order current and past medical records, check the MIB, and a variety other measures to make sure they understand who they are potentially insuring.

Always be honest about your health so your agent can find the best policy for you. Usually, a physical exam is required for both term and whole life insurance.  Even though there are some No Exam insurance policies that do not require the medical exam – most companies know they are taking a risk if they do not know your physical health.  Most whole life insurance policies do require a physical exam.

Your agent’s job is straightforward. They’ll shop your case and find the best policy on the market based on your health and lifestyle – but you need to provide them accurate information so the policy you get will pay out when it’s needed.

Why you should purchase a term policy

Term life insurance is much easier to understand. It’s why financial celebrities like Suze Orman and Dave Ramsey recommend it. Term life is cheap and it’s a much more affordable product compared to a permanent policy. You can always opt to buy term and invest the difference.

Permanent life insurance policies such as whole life, universal life, or guaranteed universal life is more expensive.  It’s actually smarter to choose a basic policy so you are not cutting into your retirement savings.

How long should a term life insurance policy run?

You should typically get a policy that will run for 10 years or longer.  Although there are some term policies that only run for a year, there is a good chance your premium will increase each time you renew it.  Most people want coverage that will last for the full length of time they will need coverage. For instance, if you have a loan that you know will take 10 years to pay off, you shouldn’t buy a policy that only lasts for 5 years and then buy another one for another 5 years.  One, why go through getting a new policy all over again? Two, the older you get the more you will have to pay for your life insurance, which means your new policy for another 5 years will cost more.

Another thing to take into consideration, do not buy more life insurance than you need.  If you have a 20-year mortgage and you purchase a 30-year policy, you will probably be paying for the extra 10 years that you don’t need.  Take a moment and calculate how much life insurance you need so you can decide the level and length of coverage you will need based on your finances and personal needs.

Does your policy have an incontestability provision?

This will guarantee that after your initial period of time, which is normally 2 years, the insurer cannot cancel your policy as long as you pay your premium as agreed upon.  That said, the insurer can modify the policy if at some point they find out you misrepresented yourself on the original life insurance application.

Make sure you have a grace period

Most policies have a 30-day grace period to make your premium payment after the initial due date.  If something happens and you will be late on your payment, this will protect you for 30 days and your policy will not be canceled.

In some cases, if the policyholder dies just before the premium due date and the final payment is missed, the grace period will give the survivors a little room to correct the oversight by making the payment so the policy is not be canceled.

Of course paying by automatic bank draft is a great way to avoid this potential headache.

Make sure you have options

Be sure that your life insurance policy can be converted into a permanent policy if you wish.  No one can see into the future. If your financial situation or your health changes, it would make sense to convert your policy to a permanent one.  Chances are, that won’t happen but it’s a good idea to know you have that option. We never know when we could get a serious condition that could make future coverage difficult.

You should consider certain riders carefully

There are some life insurance riders that can be added to your policy but most people do not believe they are worth the extra price tag.  That said, there are some policies that include these additional benefits for no extra cost. Remember that when you are first looking for life insurance and ask your agent what riders are included or extra.

Accelerated Death

Should you be diagnosed with a terminal illness, the accelerated death benefit will allow you access to your death benefits while you are still alive so you can pay your medical expenses.  Some policies have this included by default while others may charge extra for it. Look into this when you are comparison shopping!

Annual Renewable Term

Annual renewable term is a policy that you renew each year but your premium will go up each year.

Accidental Death and Dismemberment

This added coverage pays extra if you die due to an accident that is listed in the AD&D rider or if you lose your sight, lose a limb, etc.  That said, you really should avoid this unless you work in a high-risk environment, it’s really not worth the extra cost. AD&D riders are created to offer a very narrow range of extra coverages and insurance providers rarely pay claims on them.  Just ensure your main policy offers adequate coverage.

Waiver Of Premium Rider

The waiver of premium rider pays your premium should you become disabled for a long period of time.  Therefore, if you cannot make payments on your life insurance due to a disability, chances are you cannot pay other bills either.  In addition to your life insurance, it makes perfect sense to purchase long-term disability as well. It will help cover your monthly expenses while you are disabled.

Child Protection Rider Or Child Life Insurance

The child rider will pay a death benefit should your child die. The death of a child is possibly the worst experience a parent can have. This rider will provide a benefit that would allow you to grieve & take time from work without worrying about bills and finances for a duration of time.

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