Life Insurance Costs Too High? Avoid These Mistakes
Life insurance is designed to provide financial stability to your family if something happens to you. But a lot of people make mistakes with life insurance. They settle for a group plan, fail their medical exam or they don’t shop for the best plan to suit their financial needs. Here are a few mistakes to avoid when shopping for life insurance so you can pay less in premiums and have better coverage:
1. You Don’t Shop for the Best Life Insurance QuoteSometimes people take a recommendation from a friend or work colleague about a life insurance company. But, not all policies are created equally. If you want to lower your premiums, shop for life insurance by comparing policies. You might find better deals online. Here are a few tips:
- Shop around for the best life insurance rates.
- Decide if you want term life insurance to pay a specific death benefit amount. Or, whole life insurance that you pay on over time. It builds a cash value you can draw on.
- Compare rates and then select the life insurance package you want. Talk to an insurer at the company to lock in your rate.
- Don’t settle for group insurance alone. Or, free or low-cost insurance provided by your employer or school. The coverage might not be sufficient for your particular needs.
2. You Fail Your Life Insurance Medical ExamMost people don’t prepare for a life insurance medical exam. They’re not aware that small steps can improve their score - and their premiums. Think of your life insurance exam like a physical fitness test. By avoiding salt, alcohol, caffeine and cigarettes, you might be able to improve your test score. Here are a few tips:
ExerciseExercise a few weeks before your exam to lower your weight and bring your heart rate and blood pressure down. But, don’t exercise the day or night before your exam. Increased protein in your urine can temporarily skew your urine test. It might look like you have kidney disease.
Rest and Reduce the StressGet plenty of rest and reduce your stress factors. The night before your exam, get a good night’s sleep and arrive early the day of your exam so you’re not fighting with traffic and running late. These can help to keep your heart rate and blood pressure down.
DietIf you binge eat or eat a lot of fast foods, a few weeks before your exam:
- Cut out the fast food and add more fresh fruit and vegetables.
- Eat whole grains and drink plenty of water.
- Avoid processed foods (like those frozen meals, cookies, crackers and chips). Skip the sodas, juices with high sugar and salty snacks.
Cigarettes and AlcoholCut down the cigarettes and alcohol a few weeks before your exam. By reducing the nicotine in your system, you might be able to improve your results. Reducing alcohol consumption can also help as alcohol won’t show up in your blood test.
3. You Guess at the Coverage You'll Need
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When you set up your life insurance for the first time, you might not know how much coverage you will need. But, ask yourself these questions? Do you want basic coverage for funeral costs only? Or, do you want your spouse and/or child(ren) to maintain their lifestyle? To help you:
- Use a life insurance calculator to determine how much coverage you should have based on your specific financial needs. Typically it's five to ten times the amount of your pre-tax annual income.
- Determine how much money your family will need. If you have substantial savings and assets already, you may not need a significant policy. If you are the sole bread-winner, on the other hand, you will likely need a policy that will cover your spouse and/or child(ren).
- You can also add up all your outstanding debts that a spouse and/or child(ren) would be left with if something happens to you. If you want them to remain in the same lifestyle, add up all your bills (mortgage, car note, insurance, credit cards). Then add in funeral expenses, estate costs and future bills (like a child's tuition or a spouse's future retirement home costs).
- Take the amount of life insurance you'll need with the life insurance calculator above. And, use that figure you come up with to shop for life insurance quotes. Compare quotes and lock in the best rates.