At that point where I need to pick up some Life insurance to cover the loved ones. There are several online places to go. Accuquote, Termassistant.com, myagency.net , These places give you a ball park quote based on a few questions and then show you 10 or so companies you can apply to. Wondered if there was any construction trade, woodworker or the like company that offered something. Seems like all the companies I looked at have an A+ rating from “A.M. Best” so pick one you like or pick one from a local agent.
Any thoughts?
Jeff
Replies
Jeff,
I am in Canada, but I would think the same applies in the US. My husband is a Certified Financial Planner (CFP)with an insurance based practice.
Locate yourself a good independant agent that brokers through various companies. (Licensing rules in the US are different than Canada, so full independance may be difficult to find) Do not buy through the internet. The price you pay will be the same regardless if you buy direct from a company or through an agent. You might as well get some advice.
Do you know how much you need? Do you know the type of insurance you need? Permanent? Term? Universal Life (Ugh, don't get sucked into that). A planner or good agent will guide you through a needs analysis & what solutions / products can work for you.
Your current health, family history, smoking (and lifestyle) habits play into the underwriting of coverage.The insurance carriers (suppliers) have different underwriting processes & criteria. A broker will help you select the carrier.
Insurance sold over the internet with no medical evidence is typically very expensive compared to medically underwritten coverage. It is really only for people who can't get other coverage and want a small amount to cover final expenses. It sounds like you have a young family and want them to be financially secure in the event of your untimely demise. If you are healthy, it will be much less expensive to go the underwritten route.
I am sure there is a state insurance council that can direct you to a list of agents. Then interview them, get references & call them. Remember, if you are dead and the insurance you bought has loopholes in it and does not pay out - who suffers? There are so many stories of people who thought they had coverage in place only to learn the hard way that a question on the application was incorrectly answered & lets the carrier off the hook. Get advice - your family is counting on it. Good luck.
J,
It's probably worth the money to spend a little time shopping around. Take "bids" as it were.
I had to buy some a few years ago. I went to an independent agent got the prices and features that a number of the "better" companies offered. I also called a MetLife agent because I had an existing policy with them that was about to run out. Turns out the MetLife was best for me. All I'm saying is that the features & prices can vary significantly. Check with an independent, but don't overlook the "company guys". Those working for State Farm, MetLife, etc.
If you have a Financial Advisor or someone that manages an IRA for you they would be your best source.
Jeff,
I like confused's advice. However, your state's insurance commissioner will likely have 10,000 companies listed under life insurance along with 300,000 agents. They're not the best source for leads.
And it's true that discounting premiums in insurance sales is illegal. Other than what the company can do with bundling. The cost of insurance is based upon underwriting (and underwriters can be different) plus distribution costs. Commissions are not discountable.
Insurance companies are all different. As are their policies. These need very careful scrunity by the buyer (or his agent) to be sure you're dealing with one that will be around under the terms you agreed upon when needed.
A CFP in a well established planning practice can give you a fair number of the amount of inusrance needed. One in a well established insurance practice can provide you with a better analyzed selection of companies. One with a decent regional brokerage firm could do both, but you finding one could be a bit more difficult.
The amount of insurance one needs is based upon detailed examination and calculation of one's assets and their composition. Don't take this step lightly. Be sure to account for the cost of living increases in the various components of the calculations going forward.
How the insurance is registered (or titled) can be a very important decision of the process. Most likely, the CFP will be the best source for titling suggestings.
Pete,
I'd be interested in your thoughts on mortgage life insurance*. Is it possible to buy that kind of protection at a fair price? Does it suit a young family on a budget better than whole life policies?
I'm remembering a friend who was killed in a racing accident, leaving his wife and two young sons without any insurance. His wife was a full time teacher so if they'd only had the mortgage covered, she could have gotten along O.K.
Fortunately her parents and inlaws came through financially.
*mortgage life insurance pays off the entire mortgage if the covered person dies.
"Mortgage Life Insurance" is one of the more expensive forms of policies.
You'll be better off getting a regular 20 year term policy for the amount in question than having to have the insurance company decrease the amount of insurance each year.
That means you pay the same premium for 20 years. After that, the payments will go up or you can stop paying and the coverage goes away. They come in 5, 10, and 15 year programs, too.
Pete is right on that. Term is better than mortgage insurance & personally owned is better than one supplied through your bank or mortgage holder.
Our Canadian version of 20/20 called Marketplace did an expose peice on the bank owned mortgage insurance - well worth viewing. Quite frightening really.
Shortcut to: http://www.cbc.ca/marketplace/in_denial/
Buying insurance is more complicated than the average person thinks.
ditto on the term insurance. i think at a minimum you should have enough of a lump sum to pay off the mortgage(s) plus 100k for each surviving dependent (wife counts as a dependent). in my case i have closer to 200K per each, and its good peace of mind. remember that social security also has a survivors benefit component which can be several thousand per month (check your statement) in additional benefits.
A good financial plan will specifically call out and value different obligations for someone. Such as education funds for a child. It is an easy expectation that for a newborn, the needed education funds will be in the 6 figures - 18 years form now. We factor in the future value of the need and try to pinpoint a dollar amount today that will meet that need.
Remember, a 5% return on a million is only 50K per year. Not counting taxes or the future inflation. Therefore, even with factoring in the SS benefits, less than 7 figgers for the spouse may be pushing it.
By the way everyone, I am fully retired from being a Certified Financial Planner / stockbroker. This field requires the full compliment of insurance licenses - in every state where we have a client.
Both industries (insurance and financial planning) have ethics requirements for their agents. One of those requirements is proper registration as an agent in whatever state one will solicit clients. When someone whom is a broker or agent gets on a website and starts pushing his/her sevices to individuals, he/she is breaking those ethics as well as state insurance laws - unless he is specifically and already licensed in that person's state.
That's why you should not see others hustling business here. And me being retired, allows me the freedom of honestly answering questions to the best of my ability.
I'm assuming your loved ones are little loved ones. In that case, get term life insurance with the term lasting until the youngest one is around 18-21. After that, if you kick the bucket, who cares?
There are financial planners out there who will sell you on whole life insurance because it's got a great investment component. False. You will get cleaned out by fees. If you want to invest, invest someplace with low fees; if you want insurance, buy insurance. Would you buy a shovel with a hammer attached to the end?
http://www.smartmoney.com/insurance/life/index.cfm?story=lifeterm
Hi, I'm not in the ins industry but every financial mag, every money
pundit I've heard highly recommends buying term life on the internet.
Life insurance is meant to replace your income. A rule of thumb is to buy an amount equal to six times your annual salary.
If you decide to get term life insurance, the best way to buy is by checking one of several Web sites for a financially strong company that offers low premiums.
Avoid buying more than one policy for any person. Every insurance policy you buy has fees hidden in it. So two $50,000 policies would cost more than one $100,000 policy.
Company ratings:
Look for A+ or better
http://www.ambest.com
http://www.standardand poors.com -
http://www.moodys.com -
Get a quote:
Look for A+ or better
accuquote.com -
answerfinancial.com - Strong in educational content
http://www.bestquote.com -
http://www.directquote.com -
http://www.ehealthinsurance.com -
http://www.healthaxis.com -
http://www.iiaa.org -
http://www.insweb.com - large number of automobile quotes
http://www.quotesmith.com - 800-431-1147
http://www.quickquote.com -
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