In the post today I wanted to revel some of the insider secrets or tips that I personally use and recommend to my friends and family who are thinking about purchasing life insurance. Over the past several years I’ve written thousands of life insurance applications for around $1 billion of life insurance protection.
Best Insider Tips and Secrets
1. Shop Around
I know this may sound like common sense but you would be amazed by the number of people who don’t do this. There are some very large insurance buildings on pristine real estate and very high stock prices on the NYSE because of this. I’ve been building a new insurance comparison website so I’ve been going over the prices and quotes for the top 20 producing companies in the country. It’s amazing how much prices can differentiate from one company to next for the same exact policy. Many of the well-known insurance companies, thanks to their big budget advertising campaigns are as much as 30% to 50% more expensive for the same exact policy that can be bought elsewhere. Think about how much more life insurance you could provide for your family if you saved that kind of money.
2. You Don’t Need to Choose an A++ Rated Company:
Many people believe the fallacy that one has to pay significantly more for life insurance in order to be with a financially stable, high quality life insurance company. This is incorrect. The reality is that you can purchase a policy that costs about 30% to 50% less with a company that has the same “Superior” financial rating and not sacrifice financial strength or the ability that the insurer will be able to pay out a future claim. If you take a look at the A.M. Best rating chart below, you can see by choosing a company with an “A+” financial rating, you are selecting an insurance company that is in the same “Secure” tier. By electing to go with an “A+” rated company, many times you will be able to afford much more insurance to protect your loved ones.
A.M. Best ratings scale includes six “Secure” ratings:
A++, A+ (Superior)
A, A- (Excellent)
B++, B+ (Good)
3. Don’t Lie On Your Application
I do get this question a lot. “What happens if you lie on your application and the insurance company finds out?” Almost every life insurance application has a 2-year contestably clause- meaning if you pass away in the first two years from the inception of the policy the insurance company has the right to investigate if you had misrepresented yourself on your application. If they find that you had, the insurance company has the right to return the premiums you paid and deny the death benefit. This of course can be devastating to the family and can cause a lot of frustration and heartache. Unfortunately it does happen. Many of the negative reviews of insurance companies on the web are because of this very thing. That is why I tell all my clients to be honest on the application. If you do try to hide or lie about something, just know that you’re gambling with your family’s well-being.
Don’t fall into the trap of not comparing prices and receiving multiple rate quotes when shopping for life insurance. I know it’s not the most fun thing to do with your valuable time but it is worth it to secure a lot more insurance to protect your family. Also, you don’t need to overpay for your life insurance policy just to be with a company that has an A++ rating when you can purchase the same coverage for a lot less and not compromise on financial strength of the company. And finally, be honest on your application so you don’t jeopardize your family’s well-being just to save a few bucks.