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Life Insurance: Finding the Best Rates

(5/17/2012) Looking for life insurance is not a fun prospect for most people. Thinking about mortality, and leaving loved ones behind, is something many put off. But life insurance is one of the best investments you can make, for peace of mind and for financial security.

Additionally, there's never been a better time to look for life insurance: The Insurance Information Institute has shown that premiums have dropped 50% for certain types of insurance since 1994. Plus, the sooner your buy life insurance, the better rates you may find and the more prepared you will be.

How can you find the best, most cost-effective policy for you? By asking yourself a few key questions.

HOW MUCH DO YOU NEED?
Estimating the amount you should purchase is a bit tricky. But taking the time to think through how much money it will take to maintain the lifestyle of your family and/or your beneficiaries if you die is important to finding the best policy. Reassessing this regularly is equally important - if you have a major life change such as having children, buying a house, or taking care of a loved one, your financial needs will obviously change.

As you reassess your needs, consider this tip to save money as well - instead of taking out new policies, think about adding “riders” to your existing policy. Riders exist to add extra coverage to current policies, and can help maintain your costs at an acceptable level.

WHAT'S RIGHT FOR YOU?
Several types of life insurance exist to choose from. Permanent life policies are usually a sound choice, as they offer the policy itself in addition to a cash value savings account that forces you to save (and invest) funds. But these policies do come with a higher price, and may not always be appropriate for your needs. According to the Society for Actuaries, premiums for these policies may in fact be 5-10 times higher than term life insurance. If you're just starting out, are older, or are anticipating life insurance funds to pay off a specific debt left behind after you die (like a mortgage), term life may be a less expensive and better choice.

WHAT'S AVAILABLE?
With the advent of online shopping, comparing policies and insurance quotes has never been easier. Looking at multiple sources can offer you a more comprehensive picture of the options available, and the different price points to choose from. But make sure you provide the same information, and the most complete information, when you shop. This ensures you're getting a good price for what you actually need.

WHAT CAN YOU IMPROVE?
Face it - the healthier you are, the less of a risk you seem to insurance companies. So maintaining a healthy lifestyle will mean lower insurance quotes. Quitting smoking (or never starting to begin with) does wonders for premium prices. Losing excess weight, which is proven to precipitate a slew of health issues that make you riskier, will reduce your rates as well. Reducing high cholesterol and blood pressure is also a boon to premiums. If you have existing health conditions, making a good effort to improve through taking medications regularly and acting responsibly will help cut rates. Ultimately, making lifestyle changes can save you tens of thousands of dollars over the life of a policy.

HOW CAN I PAY?
Paying annually rather than monthly can cut costs as well. Some insurance companies actually charge fees for monthly billing, so if you pay fewer payments over a year, you'll pay less overall.j

While life insurance may seem like an unnecessary and even morbid purchase, it is possible to find highly affordable insurance that provides long-lasting security and protection. With these and other purchasing guidelines you can find the best for you.