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How To Buy The Best Life Insurance: Tips & Hacks

Last updated 03/21/2024 by

Julie Pimentel
Although the average age expectancy in the U.S. today is 79 years old, purchasing life insurance is always a good idea, as it will provide you peace of mind knowing that your family will be protected if anything were to happen to you. However, there are many decisions regarding the purchase of life insurance to consider. To make the process easier for you, here are a few smart hacks and tips to not only give you an edge when purchasing life insurance but to help save you money.

Life insurance costs

The younger you are when you buy your life insurance, the less expensive your premiums will be. For example, Mike Navarre, a Farmer’s Insurance owner, says: “A 30-year, $500,000 term insurance policy purchased at age 25 would have a premium of about $46 a month or $552 a year. However, if you wait until your 35 years old to buy that $500,000 policy, your premium would increase to $92 a month.”

What type of insurance is best?

You should be familiar with the differences between the two main types of life insurances. As Andrew DeBell, assistant vice president of executive benefits at Woodruff-Sawyer explains, “The main difference between term and permanent insurance is the duration of coverage and the cash value contained in the policy. Permanent coverage has a longer duration and builds cash value but it is also a lot more expensive.”
Choosing term life insurance might be more attractive when you’re just starting out in life as it’s the most affordable type and the least complicated. You should always speak to an insurance agent who can determine the best type of insurance for your overall financial situation.

How much should you spend?

Nobody wants to spend more money than necessary when buying life insurance. To figure out the right amount of insurance to buy, try this Life Insurance Needs Calculator. It will help you determine the amount of money your family will need to pay off if there are any debts at the time of your death. Your final expenses might include uncovered medical bills, funeral and estate-settling costs, outstanding debts, mortgage balance and college costs to name a few.

Buy insurance in bulk

If it’s determined that the amount of money suggested for you to purchase falls into the $100,000 policy category, consider purchasing at a higher level such as $200,000. It’s to your advantage to buy more insurance than you might initially consider. The insurance industry sets prices by tiers or rate bands. They are priced by units and the units in the lower bands are priced more expensively than the upper bands. This causes the smaller policies to be less cost effective than the larger policies. You could think of it as the costs of buying travel-sized items versus buying in bulk at the store. For this reason, it is better to go with the largest policy you can afford.

Improve your health

Life insurance companies set rigid medical guidelines when investing in your life. The main criteria include your age, sex, whether you smoke, current health conditions and your family’s health history. You can also manage your health by taking care of yourself.
  • Lose weight
  • Stop smoking
  • Improve your cholesterol
  • Improve your blood pressure

Work with independent life insurance agents

Take advantage of independent agents when you start shopping around for life insurance. They work with multiple companies and know which ones are more lenient regarding the medical guidelines. They also can navigate you to companies that won’t penalize you if your family has a history of cancer or chronic diseases. Working with agents could save you from being denied your life insurance policy.

Purchase multiple policies

During your lifetime, you will experience significant changes. You may need to pay off a mortgage, college tuition or deal with losing a job. Navarre suggests purchasing multiple term life policies as they can act as a “safety net” to protect your loved ones. For example, if you suddenly were no longer around to pay off your mortgage, having a term policy would provide coverage of that mortgage and take care of your loved ones. Using multiple policies in this manner is referred to as “laddering,” “layering” or “staggering” in the insurance industry.

Use life insurance to pay for college education

Another insurance hack to consider is to purchase child insurance with the intention of using it to pay for a child’s college education. Navarre says, “You would need to purchase permanent or whole insurance to use the cash value component, which grows and distributes with no taxes or penalties. When your child is college age, you have the flexibility to spend on any expense. You could even wait until post-college to pay for college loans. The money in the account doesn’t count against the child’s assets like a 529 or other savings, so they can qualify for more potentially interest-free education loans, and then pay the loans once the interest begins to come due by using the cash accumulation.”

How to proceed

“Taking time on the front end of the process can save you a lot of time and money on the back end,” DeBell says. “Pay attention to the agents seeking quotes on your behalf, so you don’t end up wasting time or money. Many agents will simply quote the best rates to get a client on board only to find that there are health or risk issues that exclude them from these top rates, making coverage significantly more expensive.”

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There is a lot to consider when shopping for insurance. Hopefully, these tips and hacks will help you gain an edge to make it easier to make your insurance purchase. Here are a few insurance companies to help you obtain quotes and the best possible deals.

Julie Pimentel

Based in San Francisco, Julie Pimentel has served in various capacities at startups including CitySearch, GeoCities, Photobucket and JamBase where she learned to wear multiple hats from sales, marketing to business development. When she's not writing online, she's working with clients from her digital marketing agency to help grow their audiences and improve their online presence and conversions.

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