Just last night I was watching the news with my wife. We were sad to see two couples killed instantly when a small pickup truck jumped over the Coronado bridge and landed on them below. Sadly, I don’t think they ever saw it coming.
Life is pretty fragile. This reminds me that an important part of wealth management is making sure your family is protected at all times. I’m confident that I can support my family while I’m still present in their lives, but what if I or my wife is not here? I’m not naive enough to assume God will take me home at the exact point of my choosing. I’d rather prepare in advance with a little insurance!
Once we began to have children, it really spurred us to examine our life plan. This meant making sure we had a family trust in place, a will, an advanced health care directive, and ample life insurance should one or both of us exit this world prematurely.
Today, I will just be focusing on the life insurance portion and how to find it efficiently. I will certainly circle back on the other important life plan components in a future post.
Why Even Have Life Insurance?
Unexpected events are a fact of life whether or not we choose to face them. For me, I like to know my odds and prepare accordingly to protect my family in advance with life insurance.
What I’m really after with life insurance is peace of mind.
I want to know that my life policy will pay out enough in benefits to my surviving family to sustain their current quality of their life (or better). Thus, my wife and I chose to purchase 20-year term life insurance for our family a few years ago.
Why Term Life Insurance Could Be Great For Your Family
Term life insurance is a policy that is temporary. It is defined by a specific “term” or time period with guaranteed annual premium rates throughout the entire duration. This can range all the way from 10-30 years . You can also choose a whole life policy which is permanent until you die. Figuring out which type to choose is really a function of your goals.
The reason we chose the 20-year term a few years ago was that we were confident that our assets would be substantial enough to supply our kids with a healthy nest egg. Also, after 20 years, our children will likely be out on their own and able to make a living independently.
My general thought is to not overpay for insurance benefits. So, I believe in shopping for the best supplier available.
Finding a Reliable & Trustworthy Quote
So, how do you begin finding reputable companies that will offer you competitive bids? There are a couple of routes you can go.
Back in 2012, I simply asked our existing insurance agent (Allstate had our auto and primary homeowner insurance) for a quote. They were very helpful and worked with us to run the numbers with their sister company that offered term life.
I also requested bids from a couple other major brands (State Farm & Farmers) that held some insurance for my rental properties.
In the end, we went with Allstate’s sister company, Lincoln Benefit Life. It’s been a few years since we started which means we have 15 more years on the original 20-year term.
Secondly, you can use a broker or an online search partner like Select Quote. In hindsight, using this type of service would have been very beneficial to compare even more companies than I had. I don’t know what the results would have been, but it’s possible I left some money on the table.
The best part of this option is that the broker will submit the inquiries on your behalf to multiple providers and save you a lot of time vs. doing it manually like I did with Option 1.
It’s important to be able to compare life insurance policies objectively. Sometimes this can be a little hard (think auto insurance) because their terminology can be a bit different from one company to another. Once you see enough quotes, though, you’ll be able to extract the main components and get a good side-to-side comparison.
Since I didn’t do a thorough search with Option 2 a few years ago, I decided to search again 5 years later. Did I really find the best policy? Insurance premiums can vary greatly to the tune of hundreds of dollars per year. Multiply that out by 20-years and you’ll see why it’s well worth the time to do some extra research.
I decided to use Select Quote to conjure up some quotes in today’s prices for 15-year term life insurance policy.
Select Quote is great because it helps you to impartially shop high-quality insurance companies all at once.
My Updated Search
Although we have been paying the annual premiums on our 20-year term life policy, I recently realized I could still shop my policy part way into the term.
The way this works is that you can find a new policy, say a 15-year term that can overlap the existing policy. You then simply stop paying the premiums on the old one and you’re switched! Just make sure you don’t stop paying until you confirm you’re covered under the new policy.
If I can find a highly reputable company willing to provide me a 15-year term life policy that is significantly cheaper, and with the same payout, well then I just may be interested in switching!
Here are some of the reputable brands Select Quote works with which put me at ease.
Select Quote’s Free Online Quote
I wasn’t sure how easy it would be to get a quote, but I was happily surprised by their process. It was simple and to the point.
Remember to fill it out as honestly as you can the first time around. This will ensure you’re getting the most accurate quotes available.
In my case, I selected a benefit of $650,000 should I die within this 15-year duration. I figure this is a good enough supplement in addition to my other assets available to my family.
Beyond initial personal information, you’ll be asked some family history, past medical conditions, etc. The insurance companies need to know how to categorize your likelihood of dying in order to underwrite a competitive bid.
The final page just asked for my contact information. Super easy!
On the last page, I noticed some fine print disclosing that I would be signed up for additional marketing emails.
As I kept reading, Select Quote mentioned I could alternatively call their toll-free number at 1-800-670-3213 for the same results, minus the additional marketing emails. I liked that and promptly gave them a ring!
After several rings, Ronada picked up. She was very nice and informative with my questions. She also walked me through the brief medical history questionnaire in about 10 minutes. When she was done, she explained the results and then promptly sent them to me in email format too.
She gave me the results from a few different providers. Banner was the most competitive when it came to price at $351.20 for my annual premium.
I’m currently paying $431.41 for my existing policy. So, the potential cost savings are $80.21 per year for 15 years, or $1203.15.
I didn’t tell Ronada what I was paying beforehand, so it was great to see that the competition is being aggressive with its pricing independently.
So, am I going to switch to save myself $1203.15 over the course of the policy?
Quite possibly. But, there are some additional factors to consider first.
What kind of rating did Banner receive?
A quick search on A.M. Best shows it received an A+ rating compared to my existing provider Lincoln Benefit Life at an A-. I’d say it’s comparable.
Will I actually get $351.20 for my new premium?
Maybe. Maybe not. The reason I say this is that it depends on how my health checkup results come back. Since I haven’t been to my doctor in a few years, there’s always that possibility that I have hypertension or high cholesterol that would make my risk slightly higher.
If that were the case, I would still be approved most likely, but at an increased premium rate to reflect the risk adjustment. So, I need to keep that in mind.
Here is the process laid out in a simple flow chart.
The mini medical checkup usually involves a nurse being dispatched to your home/office to draw some blood and take vitals.
So, there you have it. Using a site like Select Quote can really help you find a competitive quote with a reputable company. The process only took me 30 minutes including my phone call.
If you’re just starting to think seriously about term life insurance, I’d suggest Option 2 to begin your search. You can always use Option 1 for good measure as well.
I will tell you after getting covered, it was a really big weight lifted off my shoulders. I hope you and your family can feel this too.
*Note: This article was sponsored by Select Quote, but all thoughts and opinions are all my own.
Readers, do you have life insurance? Are you thinking about it? What type of life insurance do you have?
- Teaching Kids About Money is A Lot Harder Than I Thought - November 17, 2022
- Finding FI Interview #43: Invest in what you understand with Alexander Kelm - October 31, 2022
- Are You Getting Paid What You Are Worth? - October 24, 2022