Like many other products and services offering lower prices due to harsh economic conditions, consider buying term life insurance this year. The rates on term life insurance are lower than ever. A male, non-smoker at the age of 40 can expect to pay $400 or less per year for $500,000 in coverage.
At Money Crashers, we only recommend term life insurance over permanent life insurance such as whole life and universal life insurance for these reasons:
- We do not believe that you should mesh your investments with your insurance policy.
- The premiums and fees you will pay for whole life and universal life are three to four times higher than term life policies.
- Life insurance agents make more commission if they sell whole life and universal life insurance products, and this clouds their judgment when determining whether permanent insurance is a better fit for you. Believe me, it’s never a better fit. It’s a rip-off.
- If you are elderly and you do not have any dependents anymore, then you don’t need life insurance. Use the premium you would have paid to a permanent life policy and invest it in something conservative if you are worried about burdening your spouse with funeral costs.
- When you pay the premium for a permanent life policy, the first 12 to 24 months of premium go straight towards paying fees, and then a portion of the premium builds up cash value. If you die during the policy period, your beneficiary receives the death benefit, but the cash value of the account disappears, which means the life insurance company absorbs it. Nice, huh?
So, now that I have convinced you to shop for a term policy, consider these ways to save money on a term policy:
- If you have a condition such as hypertension, high cholesterol, or diabetes, check with your doctor first to receive clearance from him or her that the condition is under control. Don’t let a condition like that show up on the medical exam without an explanation about active treatment.
- Watch your weight. Life insurance premiums will increase if their calculations believe you are overweight.
- Drive carefully. Life insurance policies might pull your motor vehicle report to see how many moving violations you have. If they think you are a speed demon, they’ll raise your premium rate, because you are a higher risk to get into a life-threatening car accident.
- Don’t work in a dangerous career field. This is one you can’t help. Don’t change your career just to get better life insurance premiums, but it will affect them if you work in an industry more prone to injury such as construction work or operating heavy machinery.
- Do well on your medical exam. Many life insurance companies want you to take a medical exam before they insure you to make sure you don’t have a medical red flag. Try to fast for 24 hours before the exam and stay away from poisons such as caffeine and alcohol. Also, stay away from fatty and salty foods like McDonald’s the week prior to the exam.
Life insurance is essential for individuals and couples with dependents such as children, stay-at-home spouses, and elderly parents that you care for. Term insurance gives you the best bang for your buck, and it’s easy to understand. Consider purchasing it this year and follow the tips above to make sure you don’t get ripped off.