The average person seeking life insurance quotes thinks that they understand the system completely. However, they often find themselves surprised when they get into the market and learn that their current policy has become overpriced or that their life insurance rates are not identical to the initial quote. Learn these surprising facts before you enter the market and be better prepared to evaluate your offers and keep your costs as low as possible.
Fact: Monitoring Your Policy Is Crucial For All Plans, Not Just Long-Term Options
When an individual holds a term policy, it is a mistake to avoid monitoring and comparing life insurance rates. Once the policy expires, the individual either shops for another policy or must go without coverage. Most individuals will choose to explore the market again, and are often surprised to find that they could have gotten much lower life insurance quotes if they had looked years ago.
The same exact plan will often be available at a lower cost several years down the road. Even though the policy holder is aging, there are factors which can drive down the overall cost over time. Experts recommend checking every year or so to determine whether your policy cost has gone down. If so, simply cancel your current coverage and pick up the new, lower rate for the identical product. Savings over a lifetime can be very significant from this type of rate change.
Fact: Life Insurance Rates Can Decrease As You Age
One of the most common pieces of conventional wisdom about life insurance quotes is that they are determined by age and increase as you get older. In a sense, that is true; the older you are when you apply for the policy, the higher your rates will be. However, the average life expectancy is rising. Companies base their risk analysis in part on the average expectancy. Therefore, if the determined number increases, you could actually see a drop in life insurance rates. You become less expensive for the company to insure, and they are happy to pass the savings on to you.
Finally, the free market also encourages diversification and specialization. Companies now offer coverage to a more limited subset of individuals at a much lower cost, which means that individuals are again seeing more robust savings. However, none of these advantages can benefit you unless you are actively comparing your current rate to the previous quote. The best option is to monitor your life insurance rates on a yearly basis and compare them to current options. If a better rate is available, cancel your current policy and switch.
Fact: Life Insurance Quotes Are Not Always Your Life Insurance Rates
Life insurance quotes are different from rates. The quote is determined based on information you provide. The actual rate is offered only after your application has been medically underwritten, meaning that your information is approved by a medical underwriting company. Your medical records are examined and you yourself may actually go in for a medical examination by the company, depending on the details of the policy for which you are applying.
The best way to keep your quotes close to your actual rates is to be as truthful as possible in all aspects of your application. Always explain in detail your health situation and whether you engage in any high-risk behaviors. True information will help companies determine what rate they can give you, and false information does nothing to help you get coverage. You will see rates based purely on your actual situation sooner or later, so it is better to get the most accurate quotes now by providing accurate information.
Please remember that all suggestions in this article are just suggestions, and everything should be discussed with a qualified broker before you make any decisions. Don’t change your coverage without carefully considering the implications of what might occur, and remember that some types of coverage cannot be changed but must be cancelled. As always, confer with your broker to determine which options best suit your needs.
SEEK INDEPENDENT ADVICE. All information expressed in this article is intended to be general information only. You should not rely upon this general information to make legal, tax, investment, estate or financial planning decisions. No portion of this article is intended to nor does it provide legal, tax, investment, estate or financial planning advice. For this type of advice, you must consult an independent advisor.