If you have an old life insurance policy that you've been paying the premiums on for years, it can be difficult to know whether it's to your benefit to keep paying or to dump the thing. Fortunately, there's a service than can help answer that question!
The Consumer Federation of America rides to the rescue…
For $100, there's a man named Jim Hunt at the Consumer Federation of America (CFA) who will run an analysis to determine the true investment returns on any cash value life insurance policy — be it whole life, universal life or variable life.
Hunt will compare the cash value policy to the alternative of buying lower premium term insurance and investing the premium savings in an alternative like a bank account or an index fund. You get a computer printout showing average annual rates of return over five, 10, 15 and 20 year periods with detailed explanations.
At just $100, it's got to be a money loser for the CFA. But it could represent thousands of dollars in savings to you over time. Simply visit EvaluateLifeInsurance.org or call 603-224-2805 to get started.
Hunt is a retired life insurance actuary and a former insurance commissioner of Vermont. He has reviewed thousands of policies since 1984 when he began this service that Clark has long spoken about.
What you need to know about shopping for life insurance
Insurance industry research group LIMRA reports that a third of American households have no life insurance to provide for kids in the event of an income earner's death. That's a real stunner. Overall, ownership of life insurance policies is at a 50-year low. Of course, not everybody needs it…
Does somebody depend on you? Do you have young kids or a spouse or significant other that depends on you financially? Then you need life insurance!
And don't forget about stay-at-home spouses. Should a stay-at-home spouse pass away, the remaining parent would have to suddenly pay for childcare and everything else a stay-at-home parent does on a day-to-day basis. That's why it's essential the parent at home have a policy too.
Keep these tips in mind when shopping…
Buy level term insurance
With level term insurance, you pay one flat rate year after year for the length of the policy. This policy will replace your income should you die unexpectedlty. A $250,000 policy for a 35-year-old man can price out for as little as around $3 a week. But note this well: Level term insurance only provides a death benefit. It does not have a savings or investing component. It's like car insurance for your life, but instead of buying it annually or in six month increments, you buy it for 20 or 30 years and the premium stays the same during the life of the policy.
Use the Internet to shop for level term coverage
You can comparison shop for quotes at any of a number of sites like Quotacy.com, PolicyGenius.com, 1stOptionInsurance.com, Insure.com, AccuQuote.com, or QualityTermLife.com. By shopping online, you avoid an insurance salesperson trying to up-sell you from level term coverage to another insurance product that may be unsuitable for you.
Buy only from companies that are rated A++
The authoritative ratings body for insurance is AMBest.com. Most comparison shopping sites will show you the A.M. Best rating next to the quote.
Know how much coverage to buy
When it comes to the question of how much you should buy, people can get crazy with all kinds of complicated formulas. The simplest rule of thumb says that you should buy six to ten times your annual income.
Only buy through work if you have health problems
It's better to qualify and go through medical underwriting so you can buy a policy on your own. That's because most of us don't stay at the same place forever and you may not have a right to take that insurance with you.