Ways to find cheap life insurance
Taken literally, the title is designed to catch your interest rather than to give you good advice. The usual pitch from life insurance companies is that you need one or more policies to protect your family from financial hardship. The picture painted is unexpected death, your grief and difficulty in coping, and bills to pay. And this does justify buying insurance. Make no mistake. Life insurance policies save tens of thousands of households a year from financial ruin. As to finding a cheap policy, that's less of a challenge now we have the internet. Searching online quickly produces life insurance quotes The cheapest are obvious. But what life insurance should you buy based on all these quotes? This depends on three factors:
- which type of policy you decide to buy;
- which company you decide to buy it from; and
- whether your health is confirmed as good in the medical examination.
Here are some simple rules to follow to ensure the cover you buy will represent good value for money. This may not be the cheapest but buying the cheapest is rarely good value.
Buy term life unless there's a very strong reason to buy a permanent policy The practical reality is the annual premium rates for a term policy are a fraction the cost of even the cheapest whole life policy. Like every other insurance product, all your premium payments are lost if no claim is made during the term. But if the worst happens, you have a good cash benefit to keep your family's finances in good order. To break even on a whole life policy, you have to pay into it for at least twenty years. It takes that long for the investment value to rise above the fees and charges. So you only buy a permanent policy when you have used up all your other tax-free investment options and can guarantee to pay the premium for at least twenty years.
Never be taken in by the advertising. Remember your premium payments will help to pay for all this advertising and brand building. It can be better to go with companies who spend less on marketing and more on service quality.
Check out the financial stability of companies offering cheap cover. A M Best rates insurance companies. Do not buy a cheap policy from a company that may end up in liquidation before you die.
Ask about bundling deals. Most insurers offer discounts on life insurance policies if you already have auto and homeowners policies.
Think carefully about the definition of the risks. It’s easy to think of life insurance as one-dimensional, i.e. that you pay against the risk of death. But this misses an important point. The so-called double-indemnity provision doubles the payout in certain specified situations. Did you know that accidental death is the most common cause of death among adult of working age? You can save on the premium for a whole life policy with a double indemnity for accidental death.