SmartMoney offers 10 time-tested tips on how to save on life insurance.
1. Forget Corporate Loyalty
If you get some life insurance as a job benefit, that's fine. But that should never be all you have. You can't count on keeping it if you lose your job or become disabled and can no longer work. There's no federal law that says your old employer must allow you to keep the coverage, even if you foot the bill. So it's a good idea to use any life insurance you get from work as a supplement to what you buy on your own.
2. Be Sure to Negotiate
Says adviser Michael Chasnoff, who helped Campbell set up the policy: "When I started in this business, I would have never thought to question what an insurance company told a client. Now I can't see a reason not to."
3. Buy in Bulk
Sometimes more insurance costs less, especially as you approach multiples of $250,000.
4. Health Problems? Seek Out a Specialist
Luu found out, some companies specialize in particular diseases or lifestyles. For heart disease, cancer or other "impaired risks," companies such as Connecticut National and U.S. Financial offer competitive rates. These companies employ underwriters who are trained to analyze the extent of a given problem.
5. Don't Get Churned
That agent who talked you into turning in your old whole life policy for a new one (More coverage! No extra premiums!) didn't do you a favor. In fact, you've been scammed. More often than not, victims of this practice, known as "churning," receive a bill for new premiums within a year or two — after the value in their old policy has been exhausted.
6. Clean Up Your Act
You may know that you can cut your insurance premium if you stop smoking and lose weight, but you may not know just how much you can save. Well, how does 50% sound? That's right, most insurance companies charge twice as much to insure a smoker.
7. Don't Get Taken for a Rider
Insurance companies have come up with a host of extras to pad your life insurance bill, most of them not worth the paper they're printed on.
8. Know What You're Buying
Agents call it the "L" word. Life insurance, that is. Some companies teach their agents never to utter the word to prospective clients. Thus you are more likely to hear a host of euphemisms such as mortgage-protection policy, retirement plan and tax-free savings plan. Don't be taken in.
9. Try a Low-Load Company
It's a dirty little secret that insurance agents don't want you to know. But some companies sell life insurance at little or no commission. That can mean big savings for you, if you're the type who doesn't need much handholding to make a decision.
10. Avoid Hidden Fees
Convenient monthly payments, automatically deducted from your checking account. What an easy way to pay your life insurance premium. But before you sign up, ask a simple question: What's this going to cost me?
