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Cheap Life Insurance

Cheap Life Insurance

 
The best deal in life insurance--a term policy--is better than ever because premiums have fallen to historically low levels. You can buy a lot of coverage without paying a fortune in premiums. And the policies are simple enough that you don't need an M.B.A. to decipher the fine print. As the name implies, term life covers a specific term, say 10 or 20 years. If you die during that time, your beneficiary gets a death benefit. Here's how to find a good cheap policy:

 
  • Figure out how much coverage you need. Depending on your needs, you'll probably want to buy a death benefit that's 5 to 10 times your annual salary if you're the sole breadwinner in a family of four. For just a few hundred dollars a year--depending on your age and health and whether you smoke--you can get a death benefit of $500,000, which your spouse can use to pay off the mortgage, a child's college-tuition bills, and any debts. Two big reasons not to buy term or any life insurance, for that matter: Either you have no dependents or you've got enough money to cover all your family's financial needs and obligations. And, as your kids grow up and your need for insurance declines, you may not need a life policy, although many 60-plussers buy coverage as an estate-planning tool.

     
  • Pick your policy. Once you've decided how much coverage you want and how long you think you'll need it, you have some options: "Renewable term" gives you the right to renew (usually at a higher rate) for another period when a term ends, regardless of your health. "Level term" means your premium stays the same over the life of the term policy, whether rates rise or fall.

     
  • Shop for the best deal. Finding the cheapest term policy is easy thanks to the Web--but only if you know where to go. According to a study by the Consumer Federation of America, many of the sites that have popped up offering to find the cheapest term-life rates don't always deliver. Many simply sic agents on you. The five sites the CFA recommends are . Compare the deals, and check the financial rating of any insurer you are considering. You can find free ratings at . You can also get ratings reports for $14.99 at  If you choose renewable term, check periodically to see if premium prices have fallen. If you're still healthy, you may be able to switch to a lower rate. But beware of switching insurers too often, says Dick Bellmer, a financial planner with Deerfield Financial Advisors in Indianapolis. You might have trouble finding one willing to take on such a fickle customer.

 

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