Life Insurance is not a, "One Size Fits all." Obtain Quotes on
Whole Life, Term, Universal or Graded Policies
Life Insurance Costs Vary—with Age and Health.
Companies set the rates on life insurance, rates which are based on the cost of insurance for any given age and on the amount of interest a company hopes to earn on your premium. If you purchase a "level" policy—that means a policy with no future changes in premium or face value—the company will be unable to make up for a loss if you die early and likewise unable to collect more premium if inflation and interest rates fluctuate in excess of expectations. So, they build in their "risk" factors to protect themselves. A single type of policy is thus going to be relatively close in price regardless of the company. If a company's policies vary more than $20.00 a month in either direction, it's time to look into that company a little more and see why they are either so much "cheaper" or so much more expensive.
You can't control the company's pricing practices. However, most companies have lower priced policies for people who are younger, are non-smokers, and are not outside their weight limits. Thus, instead of taking the first thing that comes along, you should ask yourself what risks you personally have that might affect the price a company would be willing to give you.
Prepare for the Underwriting to get the best price.
Although answering two or three pages of questions might seem like a nuisance, the lowest priced policies are "fully underwritten." That does involve a lot of questions, not only about your health, but also about your family history and life style. Companies know that people who look for policies that require no questions often have a health or family issue that they would prefer not to disclose. Those who are in good health, limit their risk taking activities, have good driving records, good habits of citizenship, and a family history of taking care of themselves, will not fear the questions or the accompanying paramedical exam required by many companies. If your health is as good as you think it is, you may even get a "preferred" rate which can save you as much as 30% in premiums. Even if you can't get a preferred rate, a company that does complete underwriting often has lower premiums on even their standard plans. However, the following are a few life habits/situations that are in your power to change. Doing so will not only improve your health but will save you big bucks on both life insurance and, for that matter, health insurance as well.
Sedentary Life Styles: People who have no hobbies, who sit all day at work, and then plant themselves in front of a television at home usually have health issues that a more active person will not have. Simple activities can improve your health and make you eligible for lower premiums. Try taking the stairs instead of the elevator at work; pass up the movie and instead go out for an evening of bowling, window shopping, or even just for a walk. Walk short distances instead of driving whenever possible. And get outside! A lack of Vitamin D, especially in northern climates, contributes to a lot of health issues.
Tobacco Use: Smokers, on average, die younger than non-smokers. And those who do live gradually acquire various diseases such as COPD, chronic asthma, and other lung problems. Nearly all companies charge more if you smoke, and some companies are nearly double for a smoker.
Face the Truth Regarding Your Build: Most companies are rather lenient with their weight limits. If you are outside a certain range, however, you may be limited to a standard plan. A person who is classified as "obese" can be turned down or severely rated up. The food industry has not been helpful in making good eating habits easy, but you can take charge. Learn the truth about such things as transfats, high fructose corn syrup, prepared foods, and fast foods. It's one thing to pig out on a holiday or enjoy a favorite dessert now and then. It's another thing to nibble constantly, return to the table for seconds and thirds, or get the upsized fastfood meal. When you eat, think about whether you are really hungry or are just eating out of habit. And learn to stop when you are satisfied, rather than when you are stuffed. If your weight is out of control and changing a few habits doesn't help, seek medical advise. It will add years to your life and give you lower life insurance premiums at the same time
What Type of Policy Do You Need
Different types of policies are priced differently. That makes sense to most of us, but unless we know what type we need, it's easy to just fall for the "cheapest." That can lead to disappointment.
Whole Life: If you want to make a one time decision and be covered for the rest of your life, purchase a whole life policy that has a level premium and level face value. Some modified whole life policies can have increasing premiums even though they are guaranteed to the day you die. The younger you purchase the policy, the cheaper it will be.
Universal Life: Also called "flexible premium permanent life" insurance, this type of policy can have fluctuating premiums based on changes in interest rates and in the costs of insurance. Both YOU and the company can make changes in the policy, so it's a good choice for guarding against a future loss of income or other life changes. If funded properly from the start, you usually will not have to worry about an increase in premiums.
Graded Benefit Whole Life: This type of insurance is a "whole life" in that the face value will never change and you will have it till the day you die. However, the term "graded" means that during the first two or three years, the policy will only return premium plus interest if you die of illness. In the case of an accident, the face value is paid. After the graded period, the policy will pay just like any other whole life. This is a type of policy for a person who has health issues that prevent him from getting any other policy. There is no medical underwriting. (It is worth noting that some companies also have graded term policies.)
Term Insurance: Term insurance is exactly what it sounds like. You select your term or period of coverage, usually 10 to 30 years depending on your age. The premium is very low because you are only paying for the cost of insurance during those years. The policy builds no cash value—meaning you can't borrow against it or "cash it in" if you decide you don't need it. At the end of the "term," you may be able to convert the policy to another type offered by the same company, but you can expect a radical increase in premium. Most people do not convert as the policies are not designed to be kept beyond the initial term. The primary advantage to a term policy is that you can purchase very high face values for very low premiums. Thus, a term policy can be a good way to protect a growing family or provide money to pay off a mortgage in the event of your death.
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