How To Get The Best Rate On Life Insurance

By Jason Hill

A lot of Americans overpay for life insurance every year. This can be because they either bought a product they don’t need or simply didn’t weigh all of their options. There are steps you can take to make sure you have the lowest rate on the market. Here are some tips to help you save money and still get quality life insurance coverage.

Shop Around Before Purchasing Life Insurance

Life insurance is a major decision, so it’s important to do your research. Don’t go with the first company you see, and avoid choosing a company offering a special deal for new customers just because of the deal. Marketing tricks can influence your choice, so be aware of them, and be on the lookout for deals that seem too good to be true. There are a number of factors that need to go into this decision, and there are ways to get help in the shopping process, including the next tip.

Use a Broker

Life insurance brokers have access to all of the different companies, their policies and pricing. What’s awesome about a broker is they can give you unbiased quotes without any extra cost to you. If you work directly with one insurance company, they will only be trying to sell you their products. A life insurance broker represents a long list of companies, so they won’t be forcing one particular company and their life insurance plans on you. All of the companies will be fair game.

Another great benefit of using a broker is they have insight into which company may be best for you. The lowest rate shown in an online comparison may not actually be the best rate for you. This is because all companies view different risks at different rates, depending on that particular company’s pool of clients. So while Company A may have a lower rate than Company B for an average person, Company B may have better rates for people in specific situations, such as someone with diabetes.

Only Get What You Need

Commonly, people will get a high amount of coverage because it sounds good. In reality, you will be paying for that high cost and likely won’t even be able to use all of the coverage. By working with a fair and honest advisor, you will be able to analyze your situation and figure out exactly what you need to protect you and your family without overspending on your life insurance. It’s a win-win for everyone involved.

Get Term Life Insurance

Whole life insurance can be more expensive than term life products and isn't always for everyone. When you buy term life insurance, you are buying life insurance for a portion of your life. Most people don't need coverage beyond their mortgage and kids finishing college. Term life insurance is perfect temporary coverage for those critical years if that is what you are looking to accomplish by getting coverage.

Take the Exam

No medical exam life insurance is becoming really popular due to it’s convenience, however, that convenience comes at a cost. Life insurance companies run a risk when giving you life insurance without the exam because they aren't checking your current health, they're relying on your previous health history to provide your rate. To cover this risk, the company will always charge you more than a typical medical exam policy. On top of that, you will experience limits on the amount of coverage you can get.

Stay Healthy Prior to the Medical Exam

As a way to make sure you’re in good shape — or to make sure they know if you aren’t — insurance companies will often give you a medical exam. This exam is pretty basic, but it gives the insurance company some insight into your health. After this exam, the company will decide whether or not they want to approve you. To help ensure you pass the exam, it’s a good idea to steer clear of alcohol and junk food for a few days before your scheduled exam to avoid unusual spikes in your blood work.

Don't let life insurance pricing intimidate you. Use these guidelines to keep the price low and get only what you really need, instead of paying for costly, unnecessary coverage.

Recent articles by Jason Hill: 4 Resourceful Ways to Earn Extra Money

This article was originally published on Investopedia.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.