It’s no secret that insurance companies don’t always have your best interest at heart. Sometimes, they try to sell you the wrong type of policy or more coverage than you need. This is true for all kinds of insurance, but today we’re talking about life insurance.
It’s important that you, as the consumer, understand your own life insurance needs and how much you should be spending. Here’s how to save serious dough on life insurance when you’re young and buying a policy for the first time.
Don’t Assume
Do you really need life insurance? Maybe not. If nobody depends on you financially and nobody is ever going to look to you to support them, why buy life insurance? On the other hand, if there are people who rely on you, life insurance is a must.
Related: When Do You Need To Buy Life Insurance?
Shop Around
You might love your insurance agent, but that doesn’t mean she has your best interests at heart. Understand that some agents can only sell you the life insurance their company offers. Other agents broker for a variety of companies. You want to work with brokers who represent many different companies. This is even more important if you have a health problem and need life insurance. Just ask your agent what companies they work with before you go too deep into the process with the agent.
A great company that helps you shop around for life insurance is Policygenius. You’ll fill out your personal information and they scour the internet for the lowest rates that match your needs. It’s a great way to “shop around” without having to actually spend hours on the internet trying to find the lowest price.
Policygenius also offers term life insurance through their partner Brighthouse SimplySelect℠. These policies don’t require a medical exam and you can get insured up to $2 million without paying ridiculously high premiums. You’ll just need to call a Policygenius agent and take an over-the-phone questionnaire.
Go With Term Life Insurance
If you are 20 to 39 and you need life insurance, it’s likely because you want to protect your family against the risk of your premature death. If that’s the case you may get between 7 to 10 times the protection for every dollar you spend on term rather than whole life. There are a variety of reasons for this, but suffice it to say that if you want to obtain the most coverage for the least cost, term life insurance may be what’s best for you.
A favorite choice for me for term life insurance is Bestow because they offer $50,000 to $1.5 million in term life insurance coverage that will insure you for 10, 15, 20, 25, or 30 years. You don’t even need a medical exam in order to process your application with Bestow. You can apply online and their pricing is affordable. I like that their customer care representatives don’t work on commission, so you don’t need to worry about being sold a more expensive policy.
Related: Term Life vs. Whole Life Insurance: Which Should You Choose?
Life Insurance Is Not for Kids
If you have children, don’t let some slick insurance agent crowbar you into buying life insurance for the kids. Life insurance is a tool that is meant to protect people against financial loss. Your kids don’t need life insurance because they have no income. While losing a child is a loss greater than words, life insurance for kids is almost always a waste of money. Save the premiums and invest for college instead.
Get the Right Amount of Life Insurance
By far the greatest way for you to save big bucks on life insurance is to buy the right amount for the right time. Term life is super cheap while you are young. Figure out how much you need and get it. Stop thinking about it and just do it. But keep in mind that by the time you are 60 or 70, you probably won’t need as much life insurance — if any at all. Hopefully, by then your assets will grow and your financial responsibilities will decline.
I started buying life insurance the day my eldest daughter was born. I bought more every few years as my family grew and as our spending increased. But each time I bought more insurance, I bought it for a shorter term. If you are 35 now, you might buy a 30-year policy. Then, when you are 45, you might buy a 20-year policy. That keeps the cost down and the coverage high. This kind of insurance plan assumes that you won’t need the coverage once you reach age 65 (because you’ll cut back on spending and have a fully-funded retirement account).
Your approach will probably be a bit different. But the point is to tailor a life insurance strategy based on your needs –- not the needs of the life insurance agent. Figure out how much you need and how long you need it. Then, shop around with a variety of companies who offer you term insurance and stay away from the sharpies who push whole life and/or insurance for children.
Related: Life Insurance Calculator: How Much Life Insurance Do I Need?
Summary
These are the four best steps you can take to save serious cabbage on your life insurance. What is your life insurance approach? Are there other tips you can provide to help us?