Life Insurance – 10 Tips to Maximize Your Investment

Opening a life insurance policy is an extremely important and almost vital step that you will have to take at some point in your life. Although paying for a benefit that will not be seen until after your death is a bit of a gloomy prospect, it’s something that you should strongly consider doing. The primary reason for buying a life insurance policy is not for yourself, but for your family and loved ones that will hopefully still have the rest of their lives to live after you are gone. The most common consensus regarding life insurance is that it is expensive to buy, but with the proper research and my basic yet effective tips, you can get good coverage without breaking the bank.1. Don’t settle for your employers life insurance plan.As you may know, companies often offer a life insurance policy to their employees. These policies are usually very small and although at a low cost, aren’t really worth it. Usually the policy will pay the current salary times 1, 2, or even 10 times the amount some cases. For example, if you make $30,000 and the policy offered pays 2 times the amount, the benefit would be $60,000. That doesn’t sound bad, but the policy is only in effect while you’re employed there, you can’t take it with you when you leave and the amount may not be high enough to meet your needs.2. Stay healthy.Although staying healthy is not entirely in your hands, it is in your hands to be as healthy as possible. You will receive better life insurance rates if you aren’t overweight, you don’t smoke, have a history of auto accidents or violations, even if you take a lot of medications. Life insurance companies will place you in a higher risk category and raise your rates for anything that could potentially shorten your life expectancy.3. Be honest on your quote/application.Lying is never a good thing to do, and that especially holds true for life insurance. If you do not apply with information that is true to the best of your knowledge, for example, saying that you don’t smoke when you actually do, the insurance company could potentially terminate your policy. If this happens to you, I wouldn’t expect a refund in the mail either, because ultimately it is your own fault.4. Get quotes from several companies.All life insurance companies look at different criteria and have different algorithms to calculate their price. The worst thing you can do is buy from the first company you look at without doing yourself the favor of checking out other insurers. Websites that offer quotes from several companies at once are ideal for shopping around before you make your purchase.5. Don’t wait to buy, get it as early as you can.Yes, life insurance is an added expense. Yes, you probably feel healthy and that you don’t need it just yet. Yes, it will cost you more if you continue waiting. Yes, you heard right, the older you are, the more your life insurance premiums will cost. Buying at a younger age can save you hundreds if not thousands of dollars in the long run. The reason for this is because generally the younger you are, the fewer health problems you have which means you’re at a lower risk of dying from a health related issue.6. Don’t purchase more coverage than what is necessary.Only buy enough coverage for what is needed. Keep in mind the policy is intended to provide a financial safety net for your loved ones after you are gone, until they can provide on their own and adjust to not having your income. Life insurance policies can also cover funeral expenses, outstanding debt you have, etc. Buying too much means paying a high premium price that is not necessary. Think it through however because you do not want to buy too little coverage.7. Avoid paying an agent commission if you can.A primary reason for high premiums is the commission that your agent or broker has tacked on for providing you the service. These fees can be avoided, if you are able to find a “no-load” policy. No-load policies greatly reduce or eliminate the commissions from the broker and can lower your monthly payment.8. The more coverage you buy, the cheaper the prices.This tip is only true some of the time. Be careful because this is a great selling point for insurance companies, as the price does not actually get cheaper, but rather the price per $1,000.00 of coverage is cheaper for say, a $250,000 policy as opposed to a $100,000 policy. Compare it to buying in bulk from a wholesale store, you might pay $1.00 for an item individually, but if you buy 10 at once the price may go down to $0.80 per individual item.9. Review your policy regularly.Always be sure to go over your policy and coverage levels. The best thing to do is set a date, say on the 1st of the month, every three months, and just review what you’re paying for. Your situation may change, such as a baby on the way, or a “baby” heading off to college. These changes can affect the amount of coverage you need to be carrying, whether it be higher or lower. It is important to check your coverages though because if you never check, you may not have enough coverage for your new situation or you may be paying for coverage that you essentially do not need.10. Paying per month may be costing you.The best route to take when making payments on a life insurance policy is paying the entire premium annually. Cutting the payment into 12 separate payments could lead to extra fees added by the insurance company for having to process twelve payments instead of one, etc. Paying one time a year could be rather costly however, and you may find it worth the extra money to be able to pay over time.By utilizing these 10 tips to life insurance, you will be fully prepared to shop for a company, select the coverage level to fit your needs, purchase the policy itself, and maintain it for the years to come, all the while knowing that your family will be more financially secure after you have passed away.