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Treasury Board President Anita Anand says no government ministry and agency
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Life Insurance Saving Tips
I still remember my first meeting with a life insurance salesman when I was in my 20's. I was newly married, we had a daughter and I did not want to buy life insurance. At the time I had never really thought about my responsibility to my family if I died prematurely (and of course I wasn't going to die).
After getting the policy I found out later I had been sold a product that was overly expensive and did not suited my families needs.
Life Insurance can either the financial solution for your family or could end up being a complete waist of money. Unfortunately you don't know how things will turn out, so just you buy automobile insurance or home insurance, you buy life insurance.
If you going to spend the money, the key is buy enough and never pay too much. Here are a few was you can guarantee to get the best deal ...
Buy Only Enough Based on your Actual Needs
How much life insurance is enough? Good question. Here are few things you may want to pay with your insurance proceeds:
- Debt - Your mortgage, line of credit, credit card balances, outstanding car/truck loan.
- Income - How much income would you need if you where on your own after all other liabilities are paid and for how long?
- Final Expenses - Burial or cremation, enough set aside so you don't have to go to work for a month or two and legal fees.
- Education - Set aside funds for your children to use when they go to school.
Make sure you get your agent to do a analysis and put your needs in writing. You can always make adjustments later.
Buy Only One Policy
Instead of owning a number of small policies with different companies it is almost always cheaper to buy one for all your needs with one company. There are three reasons for this ...
Each company charges an annual administration fee on every policy they sell. Most are in the neighborhood of 100 dollars. So you can imagine if you insurance on your mortgage, insurance on each of your credit cards, insurance on you personal debt, a policy for you, a policy for your spouse, one on the children, you could be spending an additional 400 to 500 dollars a year.
The second reason buying one policy is almost all ways cheaper is insurance companies give discounts on the amount of coverage you buy. It can be cheaper to buy 500,000 from one company than 250,000 from two.
The third reason is very much the same as second if you combine the coverage of the husband and wife together in the same policy this volume discount also applies.
Compare Prices and Companies
It can competitive is the coverage and how strong is the company. The economic downturn has seen companies ratings falter and the rates they charge increase, so a quick comparison is a good idea.
One on-line resource I use is www.term4sale.ca. I always compare the best rates ( this is the price you are normally quoted when calling a insurance company) called "preferred plus" just to see the top 5 companies prices.
Keep in mind the prices quoted are for the best rates available and you may not qualify.
Price isn't the only thing to consider ... but great for comparison.
Get a term long enough to do the job ... just not too long
With term insurance you can decide how long to lock the price in for. 10 year, 15 year, 20 year even 35 years if you want.
Just remember the longer the term the higher the price. Never buy a term longer than the liability your protecting. If your mortgage pays out in 15 years ... not much point in paying for 20 year term.
Most policies are renewable. So if you want to go beyond the term you can. The price will go up on renewal ... but no point paying more if you don't have to.
Cancel it when you don't need it!
The surest way to pay less for life insurance is to plan to cancel your coverage when you don't need it. That's right ... I am in the insurance business and I am advocating cancelling your coverage. Just like debt the ... the best way to pay less is to get when you need and get rid of it as soon as possible.
With proper planning you can buy your coverage when you need it, and as your needs go down and your net worth goes up cancel your coverage. Buy when you need it and get rid of it when you don't.
So there you have it 5 ways to save on your life insurance, buy only enough based on your needs, buy one policy per family, compare prices/companies, get a term long enough to do the job, and cancel it when you don't need it.
How much do need? Check my article "Life Insurance Needs using the DIME method". For other articles on life insurance and other financial ideas click on the Label by Post widget on the right side of my blog.
How much do need? Check my article "Life Insurance Needs using the DIME method". For other articles on life insurance and other financial ideas click on the Label by Post widget on the right side of my blog.
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