Ten months ago, my wife and I went through the process of obtaining term life insurance policies. The major life event that gave us the final nudge to obtain policies was the soon-to-occur birth of our son, Alex.
In the end of the life insurance-obtaining journey, we had taken out two term life policies (one for each of us) with face values of 10x our current respective annual incomes from Protective Life Insurance Company from a local Colorado independent insurance agent. You can read the full details of the process we went through in a previous post I wrote. The monthly premium payments are $49 and $15.
Reflections
Reflecting on now having our life insurance policies for 10 months (including those lovely dependable premium payments waiting for us to pay each month), I definitely feel like we made the decision to get term life insurance at the correct time in our lives and were also in the correct financial position to make the commitment.
It was the correct time in our lives because we were just about to give birth to our first child. In addition, being in our early 30’s, we were not too aged for life insurance to be affordable and not too young for life insurance to be relevant. The insurance premiums are taken out of our checking accounts each month, and I often don’t even notice that the premiums have been debited from our accounts.
Does having life insurance actually provide added peace of mind in real life? Truthfully, I hadn’t given this question a great deal of thought. It seems that since our son was born, we’ve been so busy that I don’t have as much time for reflections on financial planning decisions. However, two weeks ago while out on a group bike ride, several members of the group had a crash. All of the crash victims will make a full recovery, but one of them did have to head to the hospital. After examination, it was discovered that he had multiple broken ribs and a partially punctured lung. It was definitely a reminder that anything can happen at any time. Later that day while reviewing the incident in my mind, I did feel better knowing that if anything was to happen to me, that my son and wife would be taken care of financially, at least for a few years.
Lessons Learned
Going through the process obtaining life insurance was more involved than I was expecting based on previous experiences of obtaining renter’s/home, health, and auto insurance. Described below are several of the key lessons learned I picked up along the way.
1) Shop around online FIRST
Even if you think you will obtain life insurance through a local insurance agent, it is a valuable first step to obtain price quotes from the Internet first. This ensures that any premium quote you receive is competitive in the overall market.
One option for sourcing term life insurance quotes online is SelectQuote. SelectQuote has been in business for over 30 years and has expertise in finding the lowest cost life insurance option. To get started, you simply hop on over to their site, enter your zip code, gender/height/weight/birthdate, some information about your overall health, hobbies, and whether you use nicotine products. The last step is to enter your email, phone number, and address. Once you click “Finish,” a screen pops up indicating that one of their agents will be in touch with you soon to find you an appropriate policy fit. Also, SelectQuote is more than just life insurance, and can also be used to obtain quotes for auto, home, and senior care insurance plans.
2) Don’t fear insurance companies you’ve never heard of
On a daily basis, we as consumers are bombarded with advertisements from insurance carriers, most of which also offer term life insurance policies for sale. As a result of these ads, we have an inherent familiarity with them. You know – the Geico lizard, “We are Farmers, da, da-da, da-da, da da,” the Aflac duck, “Nationwide is on your side,” “Allstate – are you in good hands,” State Farm, Liberty, Northwestern Mutual, etc. And, most of these are great companies that have stellar track records.
However, there is a little known “secret” (actually not a secret at all) in this country. There are a number of life insurance companies that have been humming along for 80-100+ years in the USA, churning out consistent performance, never missing an insurance payout, never being over-leveraged/over-risk-exposed, and consistently being rated highly by credit agencies. But, guess what? You’ve probably never heard a single national commercial from them, and perhaps they’re not even listed on the national stock exchanges. For example, have you ever heard of companies like Ohio National Life, Lincoln National Life, American General Life, Banner Life, Savings Bank Life, TransAmerica, Protective Life, Massachusetts Mutual?
Anyhow, my point here is that you shouldn’t shy away from opening up a life insurance quote from a company you are unfamiliar with. Instead, investigate the company yourself. The key things I look for is a long historical record (i.e. company has been around for over 50 years, which is short in the life insurance industry) and a high credit rating by the rating agencies/bureaus (AM Best is the most common choice)
3) Automatic payments
After you have signed a life insurance policy, my next recommendation would be to set up an automatic payment plan to cover your premium each month. The purpose of this is two-fold. First, an automatic premium payment plan reduces the chance that you’ll miss a payment and your policy will be nullified/lapse. This is important with term life insurance because as you age, the pricing of a plan goes up dramatically. You don’t want to be put in a situation where you have to open up a new policy at a higher price, just because you weren’t paying attention during a job/family move or other life-changing event. Second, I find that when I have automatic payments in place, I “miss” the money much less than if I have to physically open my account and transfer the money manually. If it is automatic, I often forget that the money has already been transferred.
4) Obtain a policy with a mutual insurance company
Although there are many great insurance companies around today and ultimately, you should go with the company that provides the best deal/most value, my favorite type of insurance companies are mutual-type. With a mutual insurance company structure, the company is owned by the policy-holders, instead of by a private individual/group or stock shareholders.
5) Read all the fine print prior to signing and be careful with DocuSign
The last lesson I learned from obtaining life insurance policies was to be careful to read all of the fine print in an insurance policy prior to placing your final signature on the document. This is especially true in today’s online world with the use of electronic signature programs, such as DocuSign. With these programs, it is very easy to simply click “go to next signature” which can auto-scroll down multiple pages, causing you to miss important details in a document you could be bound by for tens of years.
How about you all? Do you have life insurance? Do you find it gives you added peace of mind on a daily basis? What do you find most important for life insurance?
Share your experiences by commenting below!
Disclaimer: This article was sponsored by SelectQuote, but all thoughts and opinions are my own.
***Photo courtesy of https://www.flickr.com/photos/chrigu/2635274509/in/
