Do you have enough knowledge about life insurance companies? Do you conduct your own research or do you depend on the information discussed to you by life insurance agents? Buying life insurance is merely an everyday purchase—you can do it only on one occasion or two times in a lifetime. And most likely, you wouldn’t know all the ins and outs of this crucial aspect of securing your finances. This is why it’s important to know several things prior to buying a policy.
It’s an advantage for people who buy life insurance frequently since they become a smart consumer, learning the tricks that help get them the finest value for their money. However, most of us purchase life insurance rarely—possibly only once in our lives—and cannot determine if we made mistakes along the way. In this article, we are going to discuss top tricks and strategies for buying life insurance that will help you “hack” your way to affordable prices or preferable coverage. These tips could save you from making expensive mistakes.
Trick #1: Avoid naming a minor child as a life insurance beneficiary
A lot of people buy life insurance for a great reason, it’s to provide for children in case the parents are no longer around. However, not many people know that minors can’t directly receive life insurance money. So if you name a child as a beneficiary, the life insurance company can chain the money up until the kid is 18. After that, the child obtains it—with no jurisdictions and guidance. You don’t want your kid to blew all the insurance money on drugs or a sports car without proper insurance if it gets stolen.
These can be avoided if parents create a life insurance trust for children that not only acquires the funds —no matter how old the child is—but also encloses acceptable uses. You may even have the trust pay out specific amounts of the money at specific ages, like 25, 30 and 35. Although it may cost several hundred dollars in legal fees to prepare a trust life insurance proceeds, it’s a great idea for young adults and necessary for minor children.
Trick #2: Don’t focus all of your attention on a life insurance quote
Don’t get deceived by the low price quotes you acquire online– they don’t appeal to you except you are really healthy. Statistics show that there are only 10% of people who claim get the lowest priced policy.
The premium you turned up paying doesn’t have any connection with the initial quote you get online from an agent. There are some people who are duped by an agent who quotes company X at a lower price than another agent.
But remember this, life insurance policies are sold at the same price no matter who you buy from. It truly means nothing when one agent or website is quoting a lower premium. Insurance companies will always base the price of any given policy with your age and health.
Almost all life insurance companies have 10-20 various health/price ratings and not even an agent or a website can make sure that the quote they give you is accurate. You need to apply, undergo a health check, and then go through underwriting— you must accomplish a mini-exam with a nurse in your home and after that, the company checks your doctor records and reviews and rating your health to get the actual price of the policy.
The health rating is factored by your family history, type of job, and driving record you have. You must only use quotes to narrow down your choices to the top companies. You can consider a no load or low policy. If you save more on commissions, the more money raises up in your policy.
It’s even possible to buy term insurance no load while saving a lot on premiums. The best aspect when determining price is when it matches your specific health history with the company best suited for that niche. For example, Company A is more recommended for smokers, Company B for cancer survivors, Company C for people with high blood pressure, and many more.
Trick #3: Partner with an independent agent
For most consumers, having a do-it-yourself approach when buying life insurance by shopping online is actually beneficial. However, this may not be the best option if you are not in perfect health and condition. Insurance companies apply overly varied pricing to different medical conditions and other risk factors. When it comes to life insurance, the name of the game is the greater health rating you may get, the greater the premium. We recommend that you go to the carrier who’s most sympathetic about your health condition.
The job of independent agents is to shop the market for you to find those insurers. These agents can also look for the most “friendly” insurers to a high-risk work, foreign travel plans or anything else that could influence your rate.
Trick #4: Your life insurance policy should include ‘living benefits’
“Living benefits” have turned into a relatively general element of life insurance policies that grant you to access the death benefit money on your own while you are still living under certain circumstances. If you are able to tap into your policy this manner can prove critical if you turn ill and require money to pay for living expenses or medical care, so better make sure that your policy contains this feature. Living benefits are commonly considered “rider,” or policy extras, and involve:
- Accelerated Death Benefits Rider. This benefit allows you to access your payout if you are tested as terminally ill. But rules differ and might include a life expectancy of 12 months or less, for instance. You may include this with your policy or available but with a little extra charge.
- Chronic Illness Rider. This type of benefit, on the other hand, lets you access your life insurance benefit without the need for a diagnosis of a terminal illness. Rather, eligibility to use the rider will commonly rely on your inability to do two or more “activities of daily living,” like eating, showering and dressing.
Trick #5: Secure a check to your application
There is no need to wait until your life insurance policy is provided to lock in coverage. It could take some weeks for the underwriting process, particularly if your insurer has to wait for your doctor’s office to deliver medical records, or if the underwriter asks additional information.
For the meantime, you can get immediate “temporary” coverage by sending payment for your first month’s premium using your life insurance application. Find the “Temporary Life Insurance Receipt” that’s with your application, which contains the fine print about the regulation for temporary coverage.