1. Look for insurance companies that specialise in your type of insurance
Whether you’re going for a permanent life insurance policy or a form of term life insurance, try to find a life insurance company that specialises in your preferred form of insurance.
Did you know that people considering purchasing permanent life insurance have a lot more to consider, compared to people who are buying term life insurance? Term life insurance does seem like the more confusing insurance product. But, since you only need to choose the coverage amount and number of years you would like the policy to last, it is actually quite simple in comparison.
This is because people who want to buy permanent life insurance have to get to grips with not only the several guarantees most permanent life insurance products offer, but also how quickly or how slowly the cash value of the policy will build and the policy’s internal charges.
Plus, even if a company specialises in term life insurance, and they offer you a good quote on a term life insurance policy, a company like this might not offer a cash value policy that will give you the best value over a long period.
Of course, it’s unreasonable for an insurer to expect you to become an overnight expert in all things insurance when you are considering buying a policy. But if you’re going to brush up on one thing, look into how long the policy’s coverage is guaranteed – and not projected – to remain in force at the premium illustrated.
2. Don’t pick a company for its first price quotes
The price is undoubtedly one of the most important factors to bear in mind when you look into life insurance. However, beware of going with a particular company just because they’ve given you a cheap initial price quote.
This is because a policy’s final price quote, after all your health information and personal information have been received, assessed, and fully underwritten, can turn out to be quite a bit steeper than you are willing or able to pay.
To combat this, make certain to obtain several price quotes from multiple insurers. If a final price quote does then turn out to be far steeper than you are willing to pay, simply move your discussions over to another insurance company.
But why do they do this? Why would an insurance company quote such a comparatively low, inaccurate rate if the actual amount is always going to be something completely different from this?
Well, most of the time, a company will quote a low rate to look good and appeal to potential customers by getting near the top of the list on price comparisons. It’s true that hardly any customers do end up with that price, though.
Once an insurer obtains more data about you, the true amount will always be at least a little more.
In fact, when you use a price comparison website, you can easily overlook any premium features and cash value life insurance guarantees that your desired policy may have. Things like these often make up the bulk of a policy’s price.
If you work with an advisor, they can help you to avoid these unexpected spikes, set appropriate expectations, and ultimately get the correct coverage for your needs.
3. Go for a financially strong life insurance company
When you buy a life insurance policy, even if it’s term life insurance, you’re still entering into a major long term contract. And with the payout on this long term contract always at least a decade away, it is imperative that you choose a company that’s definitely still going to be there at the end of it!
An insurance company’s ability to stay afloat amid the ups and downs of the financial markets and economy is often referred to as “claims paying ability”. Claims paying ability is measured in financial strength ratings, that get issued by companies like Moody’s, A. M. Best, and Standard & Poor’s.
Financial strength ratings can really give you a good sense of how reputable an insurance provider is, or at least, how reputable they have been in the past. So if you want to obtain a provider’s financial strength rating, why not check out their website? Or, you could ask your insurance agent.
Every financial ratings agency has their own unique way of rating providers. But in general, you should look for an A range rating.
4. Choose a company that understands your health conditions
So, we’ve already touched upon some of the ways in which life insurance rates can jump up and down across providers for the exact same applicant. As you might have guessed, certain health conditions can cause this to happen as well.
For one reason or another, some insurance providers find that they are able to give a better rate to people who have a certain medical condition while still bringing in a good profit. Some providers are able to give better prices to smokers, for example, while others can give a great rate to asthmatics.
Because of this, the health conditions that you have can dictate which providers are the best for you. But bear in mind that, even considering this, the secondary quote you get from such a provider can still be sharply more expensive.
This is again another thing that an agent can greatly help you out with, especially an agent with experience. They will know exactly which company to go for.
5. Ever heard of corporate-owned life insurance?
Insurance is usually seen as being a financial product that provides a replacement of your income when you die, as well as providing coverage for partnership buyout agreements and tax liabilities. But what about ultra-high net worth Canadians? Surely such people have no use for traditional insurance?
It’s true that most such Canadians are self-insured because of their assets. So, what type of insurance suits such wealthy people?
Well, corporate-owned life insurance can be a good solution. Corporate-owned life insurance is a tax effective way for a wealthy individual to accumulate passive wealth within a company, access the wealth tax-free, and move the wealth tax-free to their surviving beneficiaries. Check out wealthinsurance.com for more on this.