Beating Broke

Personal Finance from the Broke Perspective

How to Keep Your Life Insurance Cheap

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Life insurance can be pretty hard on the wallet. In fact, many people forego getting life insurance altogether because they think it costs too much.

My response to that – “B.S.!” A recent study by LIMRA proved this showing that consumers overestimate the actual cost of life insurance by 3 times. If you are healthy, life insurance is cheap. The study showed that a healthy 30 year-old male can get $250k of coverage for roughly $150. That’s $150 for the entire year!

Okay, now that we understand that life insurance is cheap, let’s address some of issues that can cause your life insurance premiums to increase.

Life Insurance Costs

The price of life insurance relies on a variety of factors, many of which can be controlled by you. By making a few lifestyle changes and shopping around, life insurance can be something that is very affordable and not hurtful to your budget.

One way to lower the costs of term life insurance is to stay in good health. Duh, right? Insurance companies base premiums on the health of the individual. If you are considered to be high risk, your premiums will be higher. People who are overweight, frequent smokers and drinkers, have pre-existing conditions, or partake in high risk behaviors will have higher premiums.

Keep your life insurance cheapFor example, if you are buying life insurance online and are a diabetic, it may be hard to find insurance. Keep in mind it’s not impossible as we’ve helped plenty of diabetics get life insurance. You’re just not going to get approved for a Preferred Best rating class.

People who partake in activities such as sky diving, extreme sports bungee jumping and other risky behaviors will have higher premiums as well. If you are a smoker and have had health problems in the past, you will also be considered high risk, and therefore will have to pay higher premiums.

What really affects your life insurance rate is when you have multiple health issues. Being a diabetic won’t hurt you as much. But if you’re a diabetic, overweight, have high cholesterol, and smoke; then expect your life insurance rate to be considerably higher.

To prevent this, simply try to live a healthier lifestyle. People who live risk-free lifestyles and are in prime health will have no problem getting term life insurance, and will get lower premiums as well.

Independence is the Key

Getting life insurance online quotes nowadays is super easy and should only take you a few minutes. Just be sure to shop around when buying life insurance, or at least partner with an independent agent that has the ability to shop around with multiple carriers. One recent example was a guy who contacted me that already had a $1 million term policy with New York Life. He was paying around $1,400 a year for his policy and thought he had the best rate.

When we shopped it around we found several carriers that were significantly less with the cheapest coming in at $800 a year. He saved over $600 and all he had to was make a phone call!

I had a similar experience when I consolidated all my term policies into one $2.5 million term policy. I was able to get $250k more coverage for $400 less per year.

Remember this: Life Insurance is a commodity. A knowledgeable independent agent will be able to assist you finding an affordable term life policy than an agent that only represents on carrier.

Buying life insurance does not have to be difficult and definitely should not be overlooked because you think it costs to much.

Have you put off buying life insurance? If so, what’s holding you back?

Is Your Financial Planner a Crook?

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It’s important to trust your financial advisor.

A few years ago I caught a story on the local news about a financial advisor from my hometown who was arrested for violating that trust. He had been a financial advisor for many years and was charged with financial exploitation of the elderly.

In one instance, he had sold one of his elderly clients an annuity. She trusted her advisor and considered him a friend so she wrote him a check. Did you catch that?

A check directly to him, not the insurance company, in the amount of $20,000 and then he disappeared. As it turns out, she was not the only client  that had been taken advantage of.

Financial Planner Violates Trust

Graph With Stacks Of CoinsWhen I see story like this, I’m angered because I love my profession, I love what I do, and I love earning my clients’ trust. But when you have individuals as such; that abuse that sacred trust with their client, it gives my profession a bad name. You may be wondering if this could happen to you.

What To Do If Your Financial Planner is Crooked

  • If the advisor asks you to write him a personal check, that is a clear red flag. Never, never, write out a check directly to the advisor. Especially, if you are purchasing some kind of investment product.
  • If you recently purchased something but never received anything in the mail, call your advisor and see if you can get a copy of the confirmation ticket. (think of the confirmation ticket as your receipt of purchase)
  • If your advisor is guaranteeing an outrageous rate of return, be extremely cautious. I ran into a competitor that was guaranteeing 12% return on his mutual funds he was offering.

 

Background Checks On Your Advisor

Start by thoroughly researching any broker, financial planner, or adviser you are considering hiring. Explore the North American Securities Administrators Association Website, www.nasaa.org, or call 888-84-NASAA for a regulator in your state.

State regulators, along with the National Association of Securities Dealers, jointly maintain a database of more than 650,000 stockbrokers and 5,000 securities firms. Known as the CRD, or the Central Registration Depository, the database contains critical information, such as whether a broker has ever been sanctioned or fined for investor wrongdoing.

To check CRD records, contact FINRA’s consumer hotline at 800-289-9999, or visit the them online and use their “Broker Check” system.  You’ll be amazed on how much information you can find out about the financial advisor including such things as: previous work history, outside business activities, and if they have any judgements against them.

You shouldn’t just do a background check on the financial advisor you’re considering hiring.  You should also consider doing some research on the one that you are currently working with.   You never know what you’ll find out and it literally only takes a few minutes to find out.

photo credit: seniorliving.org