Josh Elledge - Chief Executive Angel
Commissioned insurance professionals may tell you otherwise, but among most consumer advocates and personal finance gurus (myself included) the advice is pretty consistent on what type of life insurance to buy. Unless you have complicated health issues, term life insurance is best, as it is simpler, much less expensive, and the price is fixed for the length of the policy, it will not go up on you later. If you have anyone that depends upon your income, such as any combination of children, elderly parents, a spouse, or others, you should have it. If you are in relatively good health and don't smoke, life insurance is a generally very inexpensive – and the potential benefit is very large.
How much should you buy? To determine the length and value you need, consider your dependents, their ages, and your income. For example, if your youngest child is 3, a 20 year policy will likely suffice. By the time the policy is up, s/he will be grown and (hopefully) independent. And during that time, you’ve (hopefully) built up savings, assets, and/or investments, to have alternative provisions for a spouse or other dependent.As for the value, the rule of thumb is 8 to 10 times your income. So if you make $40,000 a year, you’ll want to buy between $320,000 and $400,000 worth of coverage. Of course, you may choose to buy more, or less, depending on your budget. Remember, even a small policy is better than none at all.
The price for term life insurance is lower than other types. For a general example, someone young, in good health, and a non-smoker – can get a $500,000 policy for as little as $20 a month. Of course, costs vary. Life insurance companies use factor and rate tables. They look at your age, height, weight, gender, whether you smoke or not, and more, to determine your risk level and policy cost.
One of the biggest rate impact factors is nicotine use. However, as more and more people are moving from smoking regular cigarettes to the vapor (electronic) ones, it’s beginning to impact the life insurance industry. There are rumblings that one major insurance company, in particular, may soon consider them as a smoking cessation product – and will not impact your rates like traditional tobacco usage.The general rule-of-thumb for life insurance rates and tobacco use is a minimum of 12 months of non-use before you qualify for non-tobacco rates. So if you quit smoking last year, you might want to get a current quote.
The largest differences in cost are due to how each company scores a particular covered individual. Nearly all insurance underwriters require the same lifestyle and general health and demographic information, but do not necessarily value the factors identically. One company may be more forgiving of health issues than another. That’s why it’s best to work with a broker who has access to a wide range of companies. Buying directly from the insurance provider will not get you better rates.
Unfortunately, insurance calculators which don't require lots of personal information are hard to come by. I recently embedded one, however, at http://SavingsAngel.com/insurance-calculator – which is free to use and play around with.
This widget tool allows you to input your specific information, while remaining anonymous, to receive actual policy quotes and details instantly. You don’t just get general information and a bunch of phone calls from various insurance agents – which is the typical online life insurance shopping experience.
You can enter more detailed information online and get an accurate quote instantly – no need to give an email address to get this fully accurate quote. I've never heard of any other insurance company willing to do this. You can use that information to compare to your existing rate – or shop around. You have the information and control to find the policy that is right to protect your loved ones.
