Having the correct amount of coverage is essential.  Make sure you buy enough life insurance to fund the needs of your survivors.  Many people do not buy enough coverage which can cause a loved one to change their lifestyle after losing the insured.  What to do:  complete a need’s analysis with a financial professional to determine what you want funded in the event of your death.  Areas will include: coverage of survivor’s income needs, elimination of liabilities, any college funding requirements and retirement funding needs.  Purchase a Term (unless permanent insurance is desired) policy with the certain period that fits your time horizon and needs.

Your health and age make the most impact on the cost of your policy.  It may seem obvious however the better your health is, the lower your premium will be.  If you smoke any tobacco products then your premium will be at least 50% higher than a non-smoker.  The younger you are, the less expensive your cost of insurance will be.  What to do:  purchase your life insurance at an earlier than later age (assuming you have a need).  If you were a smoker when your policy was issued, reapply for a lower premium after you have quit smoking for over a year (varies by insurance carrier).   Fully disclose all medical issues before your agent takes the application.

Insurance companies price their risk differently.  You will be charged more or less for a specific amount of coverage depending on the risk pool the insurance company is looking to build.  What to do:  Use a professional who can obtain quotes from a number of companies.   If you have a medical issue, have your agent informally shop for coverage before an application is taken.  That will give you an idea of whether you can obtain coverage at an affordable cost.  Only consider insurance companies that have a claims paying rating of at least A.

Relying on employer group policies can end up being very costly.  Many employees purchase group coverage because of the convenience and initial cost.  As the years progress, the coverage becomes increasing more expensive.  The biggest risk is leaving your employer and having to reapply for coverage at a different age and health condition.  Some companies allow you to buy an individual policy before leaving their employment; however those tend to be very expensive.  What to do:  purchase individual coverage and use your group coverage to supplement your insurance needs.

The author of this article, George S. Urist, MBA, CFP® is President and Owner of Urist Financial and Retirement Planning, Inc., located in East Syracuse, New York.   George Urist has been a CERTIFIED FINANCIAL PLANNER™ practitioner and Registered Representative with LPL Financial for over 24 years.  George can be followed on twitter @gurist and can be reached at 315-445-2147 or at george.urist@lpl.com.  Securities offered through LPL Financial. Member FINRA/SIPC