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MARKETPLACE:  Auto | Jobs | People Search | Personals | Travel | Yellow Pages  January 17, 2005
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Save on Life Insurance
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We know most of us need it. If you have a family that would be affected financially by your death, you need it. Even if the family is just you and your spouse. If you died unexpectedly, you would want to help your spouse continue living in your home, paying the mortgage, etc. Plus, since our dear friend the IRS likes to be involved, they take a chunk from your survivors upon the settlement of your estate (and estate doesn�t necessarily mean the two houses in the French countryside, even a regular Joe has an estate � this is simply equity left behind). The IRS, too, wants something to remember you by. As my mom used to say, �the only things you can rely on in life are death and taxes.� Well, life insurance rolls it all into one. You die, and they tax your survivors � called an estate tax. Life insurance provides money for your family to pay for taxes incurred, funeral costs, loans, etc., etc. More importantly, it keeps your family from going through a traumatic financial loss when they�ve just gone through a traumatic emotional loss.

So, how can we save on this necessary evil? The unfortunate thing is that people don�t like to talk about it, let alone research it, and can easily get scammed. Following are some points that can hopefully help you save.

�         Shop around. Like everything else, there are deals all over but also scams you�ll need to watch out for. Luckily for us, the price for life insurance is at its lowest in the last 20 years. With medical advancements and increased life expectancy, competition is higher and prices are lower. The web is the best place you should start. There are sites that will help you figure out how much you�ll need. Once you decide how much you need, you can look at many companies who post their rates online. There are also sites that compare rates for you.

�         Look for no-commission policies. These policies have fewer costs built into them such as agent commissions. It is possible to purchase these through �fee only� financial advisors who will charge a flat rate for their work, not the amount of the policy that they sell you.  

�         If it seems too good to be true, it is. Some term life insurance policies called �guaranteed issue� or �simplified issue� policies do not require a medical exam. These are probably the ones you see at 3am when you can�t sleep. If you have some major medical problems that might make insurance companies jump, this could be the plan for you. However, since the company is taking a risk on you (you could have more health problems then they would think possible � they�re in for a huge payout), the rates are significantly higher. Try to get a policy that requires medical exams if you feel you�ll be average or higher as far as health goes.

�         Ace those medical exams and take up knitting. Not only should you like being healthy, but your wallet would like you to be healthy too. Smoking (smoking anything � even that cigar once a year on New Year�s Eve) will make your rates jump up. High cholesterol, high blood pressure, and being overweight will also increase your rates. Well, why not lie? You only smoke at parties, right? They�ll never know. Perhaps. But if you die of a smoking-related disease it is highly possible that they will hold back the majority of your policy to your beneficiaries. The other thing that insurance companies look at is your lifestyle. Do you love taking the kids heli-skiing once a year? Are you and your husband starting your own skydiving company? Well, don�t expect your insurance companies not to take this into account. While accidental death is far more infrequent than disease-related death, they couldn�t care less. Don�t change your lifestyle, but if you�re deciding between wrestling in cages with alligators or knitting, take up knitting.

�         Challenge your health rating. If since your first insurance company medical exam you�ve made significant improvements to your health, visit your doctor and have your physical resubmitted to the insurance company. They will likely lower your rates believing that you are making positive strides. Also, mistakes happen, so if you love broccoli and hate cheeseburgers (wouldn�t that be nice?) and your cholesterol is through the roof, have it redone. Insurance companies are aware of human error and will accept another medical exam if there is a big difference.

�         Find out about fractional premiums. Fractional premiums are charges incurred when you pay your insurance more often then they would like. Find out if you can pay annually and get a discount. What about having them take it directly from your checking account? That will save them money on paperwork and staff time, so perhaps they will pass that savings along.

�         Keep looking. Fortunately for us, we are not locked into our insurance policies. Like credit cards, if we find a cheaper rate we can either switch to that company (cashing out your policy and moving it to the new, cheaper company) or dangle that carrot over your current company asking them to lower your rates. If you find that you need additional insurance, you can either buy another policy or talk to your current company about a rider. A rider is an amendment to your policy that will not affect your built-up savings. You�ll find that most companies will offer a rider since they don�t want to lose your business.

Purchasing and managing life insurance is a big job. Once you decide what type of policy and how much you need, do some research and see who can offer you the best rates with your needs and medical history. Check around again annually to make sure you�re still with the best company for you. It�s an awful thing to think about, but your survivors will thank you many times over.

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