Dear Deborah,
My husband and I want to get term-life insurance, since we don't have any. What would be a good way for us to shop around for life insurance? -- Lori
If you're interested in a local insurance agency, you can look in your telephone Yellowbook. You can also search online at yellowbook.com. Some people prefer to purchase an insurance product from a local agency so they can talk face to face with an agent about their needs.
You can also go to the online insurance broker AccuQuote.com to compare term-life insurance rates. AccuQuote represents top-rated life insurance companies, such as Prudential, American General, Lincoln Financial Group, and Fidelity Life. AccuQuote is recommended by The Consumer Federation of America.
Lori, you're smart to get a life insurance policy. Too many families are not prepared for the possible death of a wage-earner or spouse. Without this extra cushion of income, the transition can be rough.
Traditional term-life is the least expensive type of life insurance, and it doesn't include an investment component. When deciding on how much life insurance to buy, insurers recommend that it's enough to cover the spouse's income. It can also cover educational costs, anticipated taxes, mortgages, or other liabilities.
Some life insurers have been raising costs by about 5%-15%, reports The Wall Street Journal. Before the Great Recession, term life rates were falling. Now premiums may continue to rise because of higher costs for capital and reinsurance.
The Journal also states that "insurers have been tightening underwriting requirements and taking a harder line on risk factors such as obesity and high blood pressure," (WSJ, June 2009). Requirements
Mr. Bland, of Insure.com, states that it's better to get coverage for a 20-year term, instead of buying a 10-year policy and expecting to buy another in ten years for the same dollar amount. It's likely that premiums will increase and one's health conditions may change.
Once insurers have received a completed application, they generally won't raise the premiums on a policy. The application process typically takes 30 or more days.
Copyright (c) 2011 Deborah Nayrocker. All rights reserved. Permission to reprint required.
Deborah Nayrocker is the author of The Art of Debt-Free Living and Living a Balanced Financial Life.