Finding the cheapest term life rates isn’t as easy as running various prices from different carriers and choosing the lowest one. If you are new to purchasing life insurance, let me start by saying that the lowest quote doesn’t equal the lowest rate.
You must qualify for the cheapest amount. Yes, truth be told, life insurance companies cherry-pick their clients and charge them based on the overall risk they pose. An insurance company doesn’t have to approve your coverage.
In this post, I’ll go over a few tips you can follow to get the cheapest possible term life insurance rates. Let’s get this going!
1. Patience Is a Virtue, Except When Buying Term Life Insurance
We all love to procrastinate, it’s human nature not to think about death and finances. After all, who has time to learn about life insurance policies. It is too dull. I usually don’t speak with absolute certainty (I have been humbled before), but this time, I will say that your term life insurance rate today is much better than in six months or a year from now—guaranteed.
Your price will be in direct proportion to your current age (among other underwriting criteria). The younger you are, the less you would pay and vice versa. The older you are, the higher the price you can expect to pay. Unless you have a way to go back in time and grow younger again, please don’t delay the purchase.
If you know you need life insurance whether you are in your thirties or seventies, just buy it and get it over with. Don’t risk waiting. Not only might you develop a pre-existing condition which may preclude you from getting insurance, but you also will become older and will pay more.
2. Don’t Go to Your Local Property & Casualty Agent
Your State Farm or Farmers agent may be the nicest girl you know and may know a lot about automobile and homeowner insurance, but when it comes to shopping for the best term life insurance rates, they only offer one company: their company.
Not only is it more expensive than other top-rated companies, but because life insurance policies aren’t in their wheelhouse, they can’t recommend the right coverage for your unique situation.
Have you ever seen a TV ad where State Farm advertises about life insurance? Of course not, they only advertise about automobile insurance (for which they have excellent products). However, they sell life insurance policies to their original clients by offering a bundle discount. Even with the cut, you will be better off getting your term life somewhere else.
Avoid the agent who sells everything (the generalist). Opt for a specialist (broker) who can place you with the best company.
3. Don’t Buy Life Insurance Through Your Association
Getting it through your association is tempting. Whether you are a physician, accountant, or driver, there are associations that promise to negotiate the prices on your behalf and provide group-sponsored life insurance.
You may even tell yourself, “After all, it’s hard to believe they can’t get me the best rate. This is a large group.” Since you are a busy person, consider yourself very responsible, and your friend bought one, you do the same and purchase it from your association.
Without going off-topic here, many times, the policies that are sold through associations are a five-year term or annual renewable term. Most people don’t really understand what they’ve bought until it’s too late. Your best bet is to start doing the research before jumping into an association-sponsored plan.
4. Your Health Is Everything
My mom says that if you lost it all but kept your health, you can always start over. If you have your health, you have everything. When shopping for the best term life rates, your current and past health conditions will dictate your final prices.
After all, the insurance company is on the hook for the death benefit amount if you die soon after buying the coverage. This brings me to the subject of staying healthy. You must do everything in your power to remain healthy, whether it’s your morning runs or eating your vegetables.
I can’t tell you how many times insurance companies were charging clients 25% or higher because they are overweight. If you are a smoker, work hard to ditch the bad habit. Not only will your life insurance policy cost less than your monthly smoking allowance, but your family would be happier also.
There are a few things you can do that can dramatically decrease your life insurance rates, and those two are at the top of the list.
5. 10-Year Costs Less Than 20-Year; 20-Year Costs Less Than 30-Year
Term life insurance provides fixed premiums for your chosen duration. The longer the term, the more you would pay. This brings me to a simple point that most people overlook: If you have seven years left on your mortgage, there is no reason for you to buy a 30-year term.
Be laser-focused on the type of term you need, and only buy that. Now, if you have a mortgage to protect and also want to protect your income until your daughter finishes college in 20 years, consider the layering or stacking approach.
You can buy two policies instead of one large policy to cover both expenses. Instead of buying a sizeable 20-year policy to cover both mortgage and income replacement, just buy one policy for 10 years and another for 20 years. In 10 years, you will only have one policy left to pay instead of two.
6. The Insurance Exam Is Your Best Friend
Don’t skip the exam if you want to pay less for term life insurance! Yes, you are paying extra for the convenience of not taking the exam and for the higher risk an insurance carrier is taking by not getting a full picture of your health.
Now, don’t get me wrong. If a client calls me and needs to get life insurance as soon as possible because he is part of a divorce settlement, I would recommend getting a no-exam life insurance policy. However, I would never suggest it to a client who has time (underwriting can take four to eight weeks) and doesn’t need the policy today.
Also, many agents will push this type of coverage because the quicker you get your policy, the sooner they get paid. Make sure you have a reason you would want to skip the exam; it sure can’t be because your broker said so.
7. Don’t Get Quotes from a Company Directly
Let me explain. If you start by going to AIG, Banner, Prudential, or Haven Life, they can only quote you their rates. Prices are fixed by law, so whether you buy a policy from AIG directly or a broker who represents AIG, the prices are the same.
Your job is finding a website that can display unbiased quotes from as many companies as possible so that you can compare and choose the best one.
Here is a clue: the form on the right, on this website, will display quotes from more than 50 insurers. Go ahead and give that a try.
8. Living on the Edge Won’t Save You Money
If there is a single parameter all insurance companies hate with a passion, it’s increased risk. Your health isn’t the only risk they care about. If you love skydiving, scuba diving, or mountain climbing, I have some bad news for you. You will pay a lot more for life insurance or not even offered coverage at all.
It also goes for driving fast or having driving violations on your record. Slow down, stay safe, you will be glad you did. I can’t tell you how many times perfectly healthy people pay a higher rate because they have a heavy foot when driving a car.
9. Seriously, Just Say No to Riders
If there is one thing I despise about marketing, it’s the up-selling or cross-selling approach. All sales gurus practice this method. It goes like this: if a client just made a purchase, they are more inclined to make another one, so you, the salesperson, just have to shove it upon them.
I refuse to operate this way! Riders are add-ons to a life insurance policy to enhance or customize it considerably. Riders, such as the return of premium or term life insurance for children, not only add extra costs but aren’t necessary.
10. Hunt for a Broker Instead of Deals
I saved the best for last. Unlike buying the cheapest hotel or flight rates, life insurance is a more in-depth purchase and should never be handled as click and buy.
There is too much fine print to be aware of before making the purchase, such as the contestability period, conversion options, and clauses among many others.
Indeed, it is in your best interest to find a broker who can be on your side when making a crucial buying decision. The good news is that brokers don’t charge a fee. They are getting paid by the insurer, and in fact, are prohibited by state law from charging a client (they can lose their license).
Do more research on the broker you are about to work with than trying to get the best term life insurance deal. Go and read online reviews, ask a few questions, and get to know him/her.
A good broker is hard to come by, but if you find one, you will not need to read all the tips above because he/she will do the right thing and place you with the best company for your unique health and financial situation.
Go ahead and start your term life comparison right here. The form on the right of the screen will display the rates from more than 50 companies to compare.