How do I find affordable life insurance policies?
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- The word “affordable” is relative
- Sources for finding “cheap” life insurance are very plentiful
- Hire a life insurance broker for fine tuning and detailed planning
- Have your cake and eat it too
- Build in choices, like an 8% return for the rest of your life
It is not difficult to get rates for life insurance.
All you have to do is go into a search engine and type in, “life insurance rates” and you will see several hundred thousand websites that will oblige you in an instant.
If you input your information, such as your name, date of birth, and other pertinent information, your phone will ring off the hook, and your email will become an avalanche of information.
The “blind internet” method is probably not the best or most efficient way of finding out about life insurance rates, as it is a little like hunting for the proverbial needle in the haystack.
Raindrops are everywhere when it is raining, but if you get too many of them you have a flood.
Learn more about affordable life insurance below and don’t miss out on our free life insurance comparison tool above!
Affordable Life Insurance is out There
When the word affordable is used as a condition for purchasing something, the usual connotation is that the individual purchasing the item wants to pay as little as possible for the item.
When it comes to the purchase of life insurance, an affordable, or cheap policy may, or may not, achieve the objectives intended by the purchaser.
For example, a policy could cost $10 per month, or it could be priced at $110 per month, and both would be “affordable” depending upon the objectives of the purchaser of the policy.
Life insurance premiums can vary according to what the buyer wants. There is a learning curve when it comes to properly buying life insurance, and it behooves the consumer to take it upon himself or herself acquire some knowledge about the subject.
–Be Smart — Hire a Broker
Rather than take all the time to learn everything you ever wanted to know about life insurance, take a little less time and find yourself an experienced and knowledgeable life insurance broker.
If you ask around it won’t take too much effort or time to find someone who can help.
Ask your banker, or CPA, or look for credentials such as CLU, ChFC, the professional designation overall for life insurance planning including not only policy forms but in beneficiary arrangements as well as life insurance setup with a will and various trust arrangements.
Companies are also ranked financially by companies like A.M. Best and Weiss Insurance Ratings.
Getting Down To Basics
If you are short on funds and you need a lot of life insurance, the obvious solution is to find the least expensive term life insurance possible. Term insurance provides a death benefit for a stated period of years, then at the end of that period, the coverage ends.
Prices will vary quite a bit for term life insurance from company to company, and it is possible to get a broad comparison by hitting the internet and just using the search engines to find the lowest prices.
You can get unlimited comparisons on term life insurance prices from many different companies.
Here is where your broker can be of great help to you. When we start comparing life insurance quotes, especially term life quotes, we suffer from the “confusion from abundance” syndrome.
Yes, there are plenty of great prices, but how do you know which companies to consider?
Your broker will be able to help you with that problem.
–Life Insurance Company Pedigrees
There are several factors that go into a life insurance company if you are trying to find the best qualities. Financial condition is important, and the ease in which one can communicate and work with a company is vital.
Your broker will be of immeasurable assistance in the company selection process, and chances are he or she will have had experience with several companies that will work out quite well.
Buy term life insurance that can be converted into permanent life insurance down the road, regardless of the state of health you are in at the time.
You may be in ill health at the time, and with a convertible term life contract, you can convert to a standard issue permanent policy that will continue beyond the final term date.
Consider the Value in the Life Insurance Equation
When we speak about a product or service being “affordable” we are speaking about a relative term. If I pay a certain price for a commodity, I might consider it a good bargain because I am comparing it to similar products.
However, if I get a return on my money over a period, the transaction might not only be “affordable,” but it also might be a good investment.
That is what permanent life insurance accomplishes. You pay a higher price for purchasing the permanent policy, and in the long run, you get your money back, and then some.
If a man purchases a whole life policy that is participating and pays dividends, say at age 35, he will do very well over the years.
While the annual premium for a $100,000 policy might be $2,000 per year, by the time he reaches age 65 he could have a total cash payback of around $135,000 or so. Since he only put $60,000 into the policy overall, that is a good return. (rates are estimates and reflect no actual policies or companies)
–The Money That Pays Forever
The $135,000 of cash value and dividends can be paid in cash to the policy owner, or it can be paid out over the person’s lifetime, and even beyond. For example, you could receive about $920 per month on a 15 year period certain payout.
That is about an 8 percent return on a tax-favored basis. If you die before the 15 years is up, the remainder of the money for the 15 years will be paid to a beneficiary.
If you live beyond the 15 years, the money continues to you as long as you live. At the end of 15 years, $165,600 will have been paid to you.
–Flexibility Wins Again
We see in the preceding example that life insurance can be structured to fit any budget, and it is very flexible in the long run, as the term life insurance can be converted to a permanent policy. So in the example, it is shown that you can have your cake and eat it too.
You can get “cheap” or affordable term insurance at the outset, and then convert it into a cash building policy if you wish at any time during the term period.
With the help of your broker, you can fit all kinds of term-permanent combinations together to achieve the coverage and cash objects that you want to implement.
The Bottom Line
Simply said, you are in the driver’s seat when it comes to how much you pay for your life insurance.
You will have many different combinations of choice, and with the help of an experienced life insurance broker, you can structure the benefits to fit any of some different scenarios. All you have to do is understand the fine points of how to put things together with your broker.
Plan to spend some quality time with your spouse, family, and your broker and make planning decisions about the life insurance proceeds that are going to affect everyone.
Decide whether you wish to have some cash at the end of life’s journey to assist with retirement. Those are the quality decisions upon which you will want to focus.
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