When we are talking to clients the goal is to establish the appropriate amount of coverage first and foremost. Often time, our clients will know the amount that they want to buy and if not we take them through the analysis. Many of our clients are looking for affordable term life insurance and interested in shopping the market. We are an independent broker, so we are not beholden to any carrier and we shop the market for them. This is a huge benefit to the client, so they can capitalize on the best carriers and the best rates on the market.
With term rates at all time lows, it is possible to get coverage at very minimal costs depending on age and health. With that being said, we know which carriers will probably bear the best rates based on age and health. Just selecting the carrier with the best rate in the quote engine can sometimes be a mistake. For example, they may show as the best rate, but you may not be able to qualify for it. Conversely, the company that shows up as the third best rate, may underwrite your case better and give you a more affordable premium.
Other ways to make premiums more affordable are shortening the term length. For example, rather than a 20 year term, we might look at a 15 year term. Obviously, it is important to get coverage that will last as long as you need it. We know all the different options and nuances to help consult you to find the right carrier for you.
Buying term life insurance is like renting your life insurance. It is very similar to getting a lease that you pay a flat rate for a period of time. You could have a 1 year lease or a 5 year lease. Life insurance companies have created different length level terms. The most popular are 10 year term, 15 year term, 20 year term, and 30 year term.
This is the most cost effective way to get coverage for a period of time. At the end of the level term period, the rate goes up very aggressively, similar to rent. Most term policyholders will drop their term when the rate goes up on the policy. Often times we will recommend some type of blend of term and permanent life insurance. When the level term period is over and the policy is dropped, then the client still has the permanent part of their insurance still in place. This approach can be a very good one as the term can cover much of the exposure during prime working years and the permanent can function as a smaller amount that will be in force after the term disappears. Many clients say, “I won’t need insurance at that point when the term ends”, but few know how they will feel at that point. Having some form of permanent at least gives you that option. If for some reason you truly don’t want the permanent plan at the end of the term, you can just cash in the cash value and walk away with that money. Often times, that can be as much or more than you put into the policy. If you want to get life insurance, there are a lot of companies competing for your business right now, so its a great time to apply.
When buying term life insurance there are several things to consider. For example, what length level term do you want to buy. They offer 1 year annual renewable term, 5 year term, 10 year term, 15 year term, 20 year term, and even 30 year term. On top of that, many of the company’s offer a return of premium option. This option will return all of your premiums to you, if you outlive the term. I recommend to our clients that they have the term run at least through the years of highest need for their families. In other words, until there kids are at least 18 and preferably through college.
The term length is important, because at the end of the term the insurance cost will probably go through the ceiling and be cost prohibitive. Another thing to keep your eye on with insurance is your insurance age. Most life insurance companies, recognize you as one year older when you get within six months of your birthday. For example, if you are turning 43 on July 11th, you want the policy to be dated no later than January 10th to be considered 42. The other option to save your age is backdating the policy. This can be a good option, but you must catch up on the back premiums. Talk to your agent about this.
Make sure to put your policy in a safe place. It is a shame, but many life insurance policies go unclaimed. Either the policyholder lost the policy or never let his/her family know that he had a policy. Of course the insurance company is ok if the beneficiary doesn’t come forward. That simply means that they don’t have to pay out the benefit. They will not seek you out. This is a good reason to have an agent that services your account and advises you on your insurance needs.
When looking for a policy look at the financial ratings of the companies. Make sure the company you buy from has at least an A rating. It is easy to get caught up on just the rate and ignore the strength of the company. With today’s financial insecurity, make sure you consider this in your decision.
