Category Archives: Insurance

Checkout How to Find Cheap Life Insurance

While a large number of factors impact the cost of a life insurance policy, they essentially break down into two groups: the policy you choose and how you’re assessed by the insurer. Since it’s much more difficult to change how you are rated by an insurer (and can take years), choosing a cheaper policy that still fits your financial needs is often the best way to save money on life insurance.

Certain policies are consistently less expensive, such as term life insurance, but can still be customized to fit your financial situation. Knowing a bit about what goes into pricing and the full set of products available can help to make sure you don’t overpay for the coverage you need.

  • Most Affordable Life Insurance Policies
  • Least Affordable Life Insurance Policies
  • What Else Goes into the Cost of Life Insurance?

Most Affordable Life Insurance Policies

While life insurance rates will vary according to your particular health and risk profile, term policies are typically the least expensive form of coverage, since they only pay out if you die during a certain period of time (the “term” of the policy). However, if you are specifically looking for permanent insurance to make sure family members are able to cover costs associated with your passing, final expense insurance is an affordable option as well.

Term Life Insurance

Term life insurance offers coverage for coverage for a specified period and, if you pass during the policy’s term, the beneficiary will file a claim to receive the policy’s death benefit. It’s typically the cheapest life insurance product, as coverage isn’t permanent and you cannot borrow against the policy. On average, a 20-year level term policy with $500,000 face value would cost $277 per year for a 30-year old male in great health.

When shopping for term life insurance, the key policy features which will impact premiums are the term length and death benefit. Term lengths can range from one year to 35 years, and your financial situation typically determines the appropriate length. For example, if you’ve just had a child and want to make sure their college tuition would be covered, you would probably choose a term of 20 to 25 years. Similarly, a policy’s death benefit can be customized (the amount can range from $50,000 to over $1 million) and should reflect your family’s financial needs if you passed.

Read more about the types of term life insurance policy >>

Final Expense Insurance

Final expense insurance is typically a permanent insurance policy with a small face value (often $5,000 to $25,000) since it’s intended to cover limited expenses associated with your death. It’s often marketed to seniors but can be applicable if you’re younger as well since the average cost for a funeral is often around $10,000, an amount most families don’t have on hand in case of an emergency.

Final expense insurance is distinct from similar-sounding products, like funeral insurance, in that the death benefit can be used however your beneficiary sees fit. For example, a child or spouse designated as your beneficiary could use the payout for your funeral, arranging travel for relatives, or even paying off a small loan. Funeral insurance, on the other hand, typically pays the death benefit to the funeral service provider to cover a predetermined set of costs associated with your burial, such as the casket and service.

The average premium for a final expense policy was $711 in 2014, according to a survey by CSG Actuarial, an industry consulting group. When shopping for coverage, keep in mind that “final expense insurance” is offered by dozens of companies and how a policy works may change based upon the insurer, so we’d advise checking that a particular product aligns with your expectations before purchase.

Least Affordable Life Insurance Policies

Certain life insurance policies are consistently more expensive and, therefore, tend to be more heavily marketed. However, they’re often not the best option for the majority of people, so it’s important to understand whether they would actually make sense for your needs.

Permanent Life Insurance

There are several types of permanent life insurance, such as whole life insurance, universal life insurance, and variable life insurance. All these policies are significantly more expensive, easily 10 times the cost of term insurance, because they offer lifetime coverage and have a cash value component. A policy’s cash value is essentially the amount of money you would receive if you surrendered the policy to the insurer, and this amount can be borrowed against or used to pay premiums. Depending on what type of permanent coverage you buy, the cash value can increase over time:

  • At a guaranteed rate, in the case of whole life insurance.
  • Either at the rate of the insurer’s portfolio or minimum guaranteed rate, in the case of universal life insurance.
  • At a rate determined by the portfolio of sub-accounts (essentially, mutual funds) you choose to invest the money in, in the case of variable life insurance. With variable life insurance, the cash value can also decrease if your chosen portfolio performs poorly.

A permanent policy is typically not the right fit if you’re looking to simply acquire financial coverage for your family in the case that you pass away, as term coverage will offer the same death benefit with much lower premiums. Given the high costs, these policies generally require that you take advantage of the cash value component of the account, or use the policy as a part of an estate plan, in order for the investment to make sense.

As an example, say a 30-year old male was looking to purchase life insurance with a $500,000 death benefit in order to cover lost income to his family in the case that he passed. Over the course of 40 years, he could save $45,144 by getting term insurance, even though his premiums increased significantly when purchasing a new policy.

20-Year Term Policy Whole Life Policy
Premium at Age 30 $277 $5,057
Premium at Age 50 $1,018 $5,057
Total Paid over 40 Years $15,540 $60,684

If you specifically want to purchase permanent life insurance, one of the simplest way to reduce costs and get the greatest value is to purchase a policy when you’re young and healthy. While you will pay premiums for a longer period of time, the annual premiums will be lower and the cash value may be significantly higher later in life as it has had additional years to grow with compound interest (assuming you don’t choose poor investments with a variable life insurance policy)

No Medical Exam and Simplified Issue Life Insurance

Any of the insurance policies above may be described as being “simplified issue” or “no medical exam”. These qualifiers don’t actually change how the policy works, though death benefits will often be restricted to less than $100,000. They just mean that the underwriting (approval) process is shortened in some way. While a shortened underwriting process may sound appealing, it means that the insurer has less information to tailor your rates and has to assume that you’re a higher risk, so premiums will typically by several times greater.

If you’re looking for cheaper life insurance prices, we would recommend going through the full underwriting process. It will require that you complete an in-depth application, receive a medical exam (takes approximately 30 minutes and can be done at your work or home), and wait a few weeks while the insurer reviews everything. But, for example, if your premium for a 20-year term policy is only $250 as opposed to $500 for the no medical exam option, you would save $5,000 over the course of the policy.

What Else Goes Into the Cost of Life Insurance?

Once you’ve chosen a particular policy, life insurance premiums are basically determined by actuarial tables that insurers use to approximate your length of life. Since life insurance pays your beneficiary when you pass, insurers want to be as accurate as possible and will often ask about your:

  • Age
  • Gender
  • Health and medical history
  • History of tobacco use
  • Family health and medical history
  • Occupation and hobbies
  • Driving history
  • Credit history

While some of these can’t be changed, such as your age and family history, if you know there is a particular reason an insurer would consider you high risk, you may be able to get cheaper life insurance rates by changing your habits or waiting a period of time.

For example, insurers typically consider you a smoker if you have smoked in the past year, higher risk if you’ve smoked in the past 5 years, and will sometimes overlook a tobacco history if you haven’t smoked in over five years. So, if you quit smoking 4 years ago and don’t have a pressing need for coverage, waiting a year to apply may reduce your annual premiums and save you a significant amount over the length of the policy.

Just note that it’s important to be honest when completing a life insurance application, even if answering the questions makes you uncomfortable or you know an answer will increase your premiums. Insurers typically have a period of a few years during which they can cancel coverage if they found you falsely responded to any underwriting questions, and you’ll forfeit all premiums paid up to that point.

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Top Secrets That Your Auto Insurance Companies Won’t Tell You

You may not know but the greatest of secrets are usually hidden in the most unlikely places. Unfolding here the top 10 secrets that your Motor insurer may use to jeopardise your insurance premium and claim too!

Tips for Finding the Right Car Insurance

While most people know whether they have liability, collision and/or comprehensive coverage, few people pay much attention to their insurance coverage until after they’ve been in an accident. In this article, we’ll go over car insurance coverage and give you some tips to help you get the most for your money.

The Basic Types of Coverage

See How Car Insurance Companies Value Cars

When your vehicle is totaled in an auto accident, your insurance company pays you for the car’s value – or, more accurately, it pays you for what it claims the value to be. You can put this money toward the amount you still owe on the totaled car, or you can use it to purchase a new vehicle. Nearly everyone who has been through this process can attest that the most frustrating part is accepting the auto insurance company’s assessment of your car’s value. Almost invariably, the estimate comes in much lower than you anticipated, and the amount you receive is not enough to purchase an apples-to-apples replacement. For many drivers, it is not even enough to cover what they still owe on the car.

Confounding the issue is the fact most car insurance customers are clueless as to the methodology used by insurance companies to value cars. The valuation methods of car insurers are esoteric, relying on abstract data, the specifics of which they are careful not to reveal. This information asymmetry makes it difficult for a consumer to challenge a low-ball offer from a car insurance company. However, simply knowing the basics of how insurance companies value cars and the terminology they use can bring you to a more auspicious place from which to negotiate.

How Claims Affect Your Auto Insurance Rates

Not all auto insurance claims are treated the same. Some will significantly impact your car insurance rates, while others will barely affect your premiums. Let’s take look at what different insurance claims means for your wallet.

General claims

Easy ways to Cut your Car Insurance Costs

Your car insurance is something you have to pay for, but there are plenty of things you can do to reduce your bill. Here are 10 top tips to cut the cost of your car insurance premiums.

Always shop around

Never settle for the first quote you find or your current insurer’s renewal quote. You can save hundreds by comparing car insurance quotes to find the best deal.

Make sure you look at exactly what each policy offers when you compare; the cheapest quote may not have all the benefits you need.

Compare car insurance

Go fully comprehensive

Choosing a comprehensive policy can be cheaper than a lower level of protection like third party, fire and theft, and it offers better cover.

This is because some insurers associate third party policies with high risk drivers looking for the cheapest possible cover. As a result many charge more for less cover.

Here is how the different levels of car insurance cover compare, including an example of how much each level could cost.

What car insurance cover should you get?

Pay up front

You can save by paying for your car insurance in one go compared to splitting it into monthly payments.

When you pay monthly, insurance companies will usually charge you interest, sometimes as much as 30% APR. Find out how much you could save by paying annually in this guide.

Get the right car

The car you drive has a huge influence on the cost of your insurance. The more expensive and powerful the car, the more it will cost to insure.

This is because the cost of repairs will be higher if you have an accident, and insurers consider you more likely to have an accident if you drive a fast car.

Every car is given a car insurance group based on how much it costs to insure. Groups range from 1 to 50, and the lower the group, the lower the car will cost to insure.

You can find out more about car insurance groups, including how cars are assigned to each group in this guide, or on the Parkers website.

Get black box insurance

This is a type of car insurance policy that installs a telematics box in your vehicle to track your driving.

It can mean you pay less if you drive safely and within the rules of the policy. This a good option for new or young drivers because what you pay is based on how you drive, not on how your insurer thinks people your age drive.

For more information on black box policies, including how they work and how much you could save, read this guide.

Can black box insurance save you money?

Take a Pass Plus course

Some insurance companies will offer you a discount if you have extra driving qualifications like Pass Plus.

These driving courses show insurers that you are a safer driver, and less likely to have an accident. Check that a discount is offered before you get a quote as not all insurers offer it.

GOV.UK website – Pass Plus

Consider a multi car policy

Insurers often offer a discount if you and other drivers in your house share a multi car policy.

They cover all the drivers on one policy and can be cheaper than separate standalone policies, but not always. Our multi car insurance guide explains how they can save you money, and what to watch out for.

How to save with multi car insurance

Increase you car’s security

Making your car more secure and less at risk to theft or vandalism can mean insurers will offer you cheaper premiums.

Consider:

  • Fitting a Thatcham approved alarm, tracker or immobiliser
  • Parking your car in a garage if possible, or on your driveway if you have one
  • Getting a steering wheel lock

Even if the cost of these security measures is not recouped by the potential savings they can be worth it for the added peace of mind.

Drive carefully

The best way to keep your premiums as low as possible long term is to drive sensibly and avoid making a claim on your insurance.

You can earn a no claims bonus for each year you drive without making a claim; a bonus of five or more years could give you a discount of as much as 75%. You can find out how a no claims bonus can save you money here.

How does a no claims bonus save you money?

Add a named driver

If you put another person on your policy as a named driver it can make your cover cheaper.

This works best if you can add a more experienced driver to your policy, for example if you are a young driver adding a parent with a clean licence and several years of no claims could bring your premiums down.

This guide looks at adding a named driver in more detail, and here is more advice on finding the right cover as a young driver.

Can you put your child on your car insurance?

5 more ways to save

Here are some more tips that could reduce the cost of your cover:

  • Cut the extras: Policy add ons like breakdown or key cover come at a cost, so leave them off to get the cheapest possible deal. Here is a list of the extras worth considering.
  • Lower your mileage limit: The less you drive, the less likely you are to have an accident and make a claim. You may be charged less if you have low mileage limit (the number of miles you think you will drive during the policy). Set a realistic limit as you could be charged for going over it.
  • Increase your voluntary excess: This is the amount you have to pay if you make a claim. If you choose to pay more, insurers can lower your premium because they will have to pay less towards any repairs; however, the total cost could be more if you do claim. Find out more about car insurance excess here.
  • Get a dash cam: This is a camera that records your journey. It can be used to establish fault after an accident, you may be offered a discount if you have one. They can cost between £20 and £180, so check the discount is worth it before you buy one.
  • Do not modify: Modifying your car to increase engine performance or adding body kits can increase the value of your vehicle and make it more attractive to thieves. As a result insurers will increase the cost of your insurance to cover the increased risk.

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Checkout 9 Benefits of Group Health Insurance

When an employer is looking to implement a group health insurance plan for their employees, they need to compare the costs and benefits. While it is simple to figure out the cost of group health insurance (simply the premium), the benefits are not as easy to quantify. We will try to answer those questions here with our list of the 9 benefits of Group Health Insurance.

Lower Cost – health insurance plans offered by an employer to their employees cost less than health insurance available in the individual marketplace. This is common sense, as when you can group many people together from different businesses and offer a plan where all employees will join, you lower the overall risk of a large claim amongst many individuals in the group.

What You Don’t Know About Car Insurance Can Hurt You

Many people do not pay close attention to the intricacies of their car insurance until they are involved in an accident. If you are unaware of what your policy covers, you could be spending more for insurance than you should. You could also find yourself unpleasantly surprised if you need to file a claim for damages from a collision.

The Importance Gap Insurance

See the 6 Things You Should Never Say to Your Car Insurance Company

Dealing with insurance companies can be complicated. It’s easy to forget that the insurance company is running a business and a business has the obligation of saving money wherever possible. Because of this, the company could misinterpret something you say offhand, creating problems for you. Here are ten things you should never tell your insurance company.Accident Questions