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6 ways to trim life insurance costs

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On the other hand, many older policies may suffer from the opposite problem.

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While a $100,000 insurance policy seemed like a fortune in 1990, it may not be nearly enough to cover today's expenses, Weisbart says.

If that is the case, it may make sense to either buy a second policy to make up the difference or even cancel the old policy and replace it with a larger one at today's rates.

For help in determining how much life insurance coverage you need, consult Bankrate's life insurance calculator.

3. Find the right kind of coverage
Life insurance comes in two basic "flavors" -- term and cash value.

The different types of policies make sense for different financial situations. With life insurance, one size certainly doesn't fit all, and with a tight budget, you may just find that your policy doesn't fit you anymore.

As a rule of thumb, term insurance is much, much less expensive than the cash value variety. And while cash-value insurance can come in handy for special circumstances, such as if you have a special-needs child, or to offer some financial stability in rough financial times, term insurance tends to rule with budget-conscious buyers.

4. Verify the company is sound
With financial misdealings and banking scandals making headlines seemingly every week, one good practice when shopping around for life insurance options is to make sure you only buy from a sound company.

One way to do that is to rely on the ratings of companies like A.M. Best, Standard & Poor's, Weiss Research, Duff & Phelps or Moody's Investors Service.

These companies check the financial books of the different insurance carriers and make sure the companies will be around if you ever have to cash in that policy.

"These things are tough to judge on your own," Weisbart says. "But you can get some help."

Weisbart suggests you check the ratings of your company against at least two of these services to make sure the first one you picked wasn't skewed in some way.

5. Get some professional help
If shopping for an insurance policy still seems daunting, you aren't alone -- at least you don't have to be. That's because in every state, regulators set life insurance rates. That means whether you buy your insurance with the help of a broker, or if you go it alone, the price is the same.

"Since it doesn't cost extra, why not get help from an expert?" Udell says.

But Weisbart says you don't have to start the process in an agent's office.

"It is not a bad idea to go on the Internet and get quotes from sites like AccuQuote and Insure.com before talking to a professional," he says. Another good site to get information and quotes is InsureMe.com, a Bankrate company.

With a rate in hand, you can be more confident that the broker is being forthright with you.

Where the agent really excels, Udell says, is by steering you toward a policy that fits your specific needs.

"People are bad about knowing what rate class they will qualify for," he says. "If you have risky hobbies or ailments, knowing which company won't charge more for that can end up saving you a lot of money. Brokers know which companies offer what and which companies are your best fits."

6. Ask for a payment plan
Assuming you already have the lowest rate available, there is still one more step you can take to ease the burden of your life insurance bill -- ask for a payment plan.

Nearly every insurance company will let you split your premium into monthly installments, and many won't even charge more as long as you agree to have the premium automatically deducted from your account.

The bottom line is that you want to make sure you have enough coverage to pay your expenses if you die, without paying more than you need to.

Bankrate.com's corrections policy -- Posted: Feb. 9, 2009
 
 
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