Secret #1: Don’t spend too much time on a life insurance quote.

Don’t be fooled by low price quotes you initially get online. Many times they don’t apply to you unless you are extremely healthy. Statistically, 10% of the people who apply online actually meet the criteria to get the lowest priced life insurance policy. The insurance policy and premium you end up with and paying for has little to do with the initial quote you get online or from most insurance agents. It’s amazing how often people get duped by an unscrupulous insurance agent who quotes company X at a lower price than another agent.

Life insurance policies are the same price no matter who you buy from! One agent or website quoting a lower premium means nothing. Prices for any given policy are based on your age and health and the amount of the policy and the length of the term. There are a few exceptions to this but that is beyond the scope of this article.

Most life insurance companies have 10-20 different health/price ratings and no agent or website can assure you the quote they give you is accurate. You simply have to complete the application, have a health check up, and then go through underwriting (meaning you complete a mini-exam with a nurse in your home and then the insurance carrier checks your doctor records and reviews and ‘rates’ your health) to provide the real price quote of your policy. Remember that a “health rating” also factors in your family history, driving record, and the type of occupation you have. Only use quotes to help narrow down your choices to the top companies and then go through the rest of the process. The most important factor determining price is matching your particular health history and situation with the insurance carrier best suited for your niche. For instance carrier X might be best for smokers, carrier Y for cancer survivors, carrier Z for people with high blood pressure, etc.

Secret #2: Term Life versus Whole Life (cash value permanent insurance) is a bunch of hype.

Some insurance websites and other sources give advice that borders on fraudulent. Simply put, there is NO simple answer on whether you should buy permanent cash value policies or term life insurance. It all depends on your individual situation and you should seek advice from an insurance professional!

There is a simple rule of thumb ­ buy term life insurance for your temporary insurance needs and cash value insurance for your permanent needs. Various journals and mathematical equations confirm that if you have a need for life insurance beyond 20 years that you should consider some amount of permanent life insurance. This is due to the tax advantages you may receive on the growth of the cash value within a permanent policy.

Most people have short term life insurance needs like a home mortgage or kids at home and they should consider that type of insurance. Many people want some life insurance in place for their whole life to pay for burial, help with unpaid medical bills and estate taxes so a permanent whole life policy makes sense for their situation. Again, unless you have the time to become an insurance professional yourself, seek competent advice from an insurance professional you trust.

Secret #3: Avoid life insurance agents who are captive with one carrier.

Seek a life insurance agent who represents at least 10-200 life insurance carriers and ask them for a multi carrier quote showing the best prices side by side. Many people think that by applying online they’ll always get a better price than what an agent could provide. Know this secret; you won’t save any money on your premium that way because the commissions normally earned by the agent are kept by the insurance carrier.

A good agent should help you maneuver through some of the complexities of filling out the application, set up your beneficiaries, avoid mistakes on selecting who should be the correct owner of the policy, the best way to pay your premium, and also will be there to deliver the check and assist your loved ones if your life insurance is ever used.

Secret #4: Review old life policies every two years.

Most carriers and many insurance agents won’t tell you this,but the price you pay on your old policies has probably come down dramatically if you are in good health. In the last few years life insurance carriers have updated their predictions on how long people will live. Since we are living longer they are reducing their rates dramatically.

Secret #5: Life insurance carriers have target niches that constantly change.

One day carrier ‘X’ is giving good rates to people who are a little overweight and the next month they are super strict. Carrier ‘Y’ might be lenient on people with diabetes because they don’t have many diabetics on the books ­ meaning they will give good rates to diabetics. At the same time carrier ‘W’ might be very strict on diabetics because they are insuring lots of diabetics and are afraid they have too big of a risk in that area ­ meaning they will give a bad rate to new diabetics who apply.

Unfortunately, when you apply for life insurance, carriers will not tell you what niches they are strong or weak in. A good multi-carrier agent is constantly applying with multiple carriers and he or she will have a good handle on who is currently the most lenient on underwriting for your particular situation. This is hard work and many agents are either too busy or not set up to efficiently shop around directly to different underwriters and see who would make you the best offer. This is a lot harder than just running you a quote online. We can’t say this enough, find a good insurance professional you can trust.

Secret #6: Customer service should be more than lip service.

People shopping for life insurance focus on carriers with the lowest price and the best financial rating and they should. Unfortunately, some A+ rated carriers with the lowest rates provide some of the worst customer service. There’s no way for a consumer to know this until after the policy has been purchased unless an experience insurance professional you trust keeps you informed of these things.

Secret #7: Allow 3+ months to get your life insurance in effect.

Even though the life insurance industry is getting more automated your application will still often be held up for weeks or months while the insurance company waits on your doctor’s office to mail them a copy of you medical records. This is not in your control and just the facts of life.

If you are in a hurry and buy a quickie ‘no-underwriting’ policy without going through the full health checks and underwriting that a mainstream life insurance carrier requires, you will end up paying 20%-50% more because these insurance carriers charge you higher rates.

Secret #8: Avoid buying extra life insurance through your work if you are healthy.

There are exceptions to this “trick” but they are rare indeed. By all means keep the free life insurance your employer provides. But if you’re healthy and are paying for supplemental life insurance through payroll deduction you are almost certainly paying too much.

Life insurance carriers will deal with your employer and will waive the required health exam for all employees ­ they average the price for all the employees and offer one or two rates for males or females at any given age. Life insurance carriers know they will pick up lots of unhealthy clients this way so they jack up the price on everyone so that the healthy people end up overpaying and the unhealthy end up underpaying. Also, these types of policies tend to not be guaranteed and may get more expensive as you get older.

Also group life insurance is generally not portable when you retire or change jobs meaning that when you retire or change jobs you might have to apply all over again even though you will be older and probably not as healthy and risk being turned down for a policy. If the group plan does allow portability they generally limit your conversion choices and force you to go into expensive cash value plans.

Secret #9: Consider COD payment.

Only send money with your application if you need the life insurance coverage right away. Sending a check with the application is a traditional practice agents used to do - mostly because it got them their commissions faster. If you send money with an application you usually get temporary coverage immediately but if you already have plenty of coverage and are just trying to get better rates ask your agent to do a trial application on a COD basis so you only pay once the policy is approved.

Secret #10: Wear your shoes when the nurse measures your height.

When the insurance carrier sends out a nurse to do your health checks try to be as tall as possible if you are overweight. In most states you are allowed to wear shoes and if you are a little overweight your taller height/weight ratio will look a little better to the underwriter who is determining your health rating and policy price. Also do your exam early in the morning with no food in you ­ this will make your cholesterol count and various health ratios look the best.

Secret #11: Avoid extra perks and riders.

Most policies come with options like accidental death benefit, child riders, disability riders, return of premium etc. If you do the math on most of these “extras” they usually don’t make smart financial sense. Life insurance companies are out to make money and these riders are usually profitable because they either cover something that rarely happens or they are so stringent that the benefit never gets paid out. Keep things simple and focus mainly on getting a life policy to cover your life without many strings attached. Again a good agent can help you weigh the benefits of the extra riders. But be wary of an agent who tries to tack on every possible extra rider.

Secret #12: Avoid those agents who can only represent a few companies.

There are hundreds of insurance companies out there who may want your business more than others. They show this by giving you a lower rate. When an agent is only approved by a few companies it is hard for them to give you any assurance they can get you the best rate. You want your policy to be the best rate with a A rated company who will be there when you need them. Want more information? Submit a quote request today!