New Study Indicates that 100% of People Will Die, Someday
Okay, so there really is no new study but since September is “Life Insurance Awareness Month”, I thought I would talk about a topic that most people do not like to discuss…Life Insurance.
I’m not going to bore you with statistics of how many Americans don’t have life insurance or how life sales are up or down this year like many publications are doing this month. I’m going to give you the straight scoop on how to avoid common mistakes that people make when buying life insurance.
I’ve been in the insurance business for over 16 years and for all this time of advising people about their life insurance, I’ve noticed that many people make the same mistakes or ask the same questions about buying life insurance. If you own life insurance or you are thinking of buying life insurance, I’ve put together some tips that can help you make smart decisions.
Tip# 1: Don’t spend too much time on a life insurance quote.
Don’t be fooled by the low price quotes that you get online – They don’t apply to you unless you are extremely healthy. Statistically, only 10% of the people who apply actually get the lowest priced policies. The premium has nothing to do with the initial quote you get online or from an insurance agent. It’s amazing to see how many people get tricked by an agent who quotes company X at a lower price than another agent.
Life insurance policies are the same no matter who you buy them from, whether it is from an agent or a Website. Prices are based on your age and your health. If someone tells you that you can “cut out the middleman” they’re not telling you the truth. Anyone who sells an insurance policy must be licensed by their State Insurance Department. So you cannot cut out the middleman no matter what the Website, Television or Radio ad says. They are all insurance agents in disguise.
Tip# 2: Ignore the hype on term verses cash value.
You can go crazy reading what everyone one has to say about buying term insurance or whole life insurance. Most insurance agents want you to buy whole life insurance because they make more money on a whole life sale than they do on a term insurance sale. Many consumers also fall into the trap of buying whole life as an investment. Most whole life policies are not investments. Whole life is merely a way to have life insurance for an infinite period during your lifetime as long as you pay your premiums and it can never be cancelled. (Certain types of whole life policies can be terrific investments. Call me and I’ll tell you how.)
Tip# 3: Avoid Group life insurance Plans.
A BIG, BIG mistake that too many people make is that they rely on their employer to provide life insurance for them. Many people will change their jobs many times during their working careers and each job change results in different group insurance plans. Not to mention that your current employer can cancel your group life insurance program at any time and leave you and your co-workers without coverage.
A smart financial plan includes having your own personal life insurance.
Tip# 4: Avoid Captive Insurance Agents.
Look for a life insurance agent that is independent. This should be someone who works with at least 10-20 companies. Ask the agent for a quote comparing several companies side by side so you can make the best choice. Captive agents can’t provide this analysis because they only represent one company. And they will try to convince you that their company is the best and only choice for you. Stay away from these agents. They are a dying breed.
Tip# 5: Buy more insurance for tomorrow than you need for today.
Too many people look at their current life insurance needs in a “capsule” of what they need today. They do not consider that their insurance needs will change as they get older. They might have more children, move to a bigger home, get a bigger mortgage and need more coverage. These life changes happen all the time with just about every one of our clients. So, picture how your life might be a few years from now and buy a little more insurance than you need today.
If you have any questions or if you would like a free review of your life insurance, call me at 914-633-1717