Here are a few things I learned through this process to get the best rate for the best life insurance policy:

• Select a Term Policy:  These will have the best rates, and the best bang for your bucks.
• Select a Good Insurance Company:  Search for a good rate with a company that is well established.
• Tell the Truth on the Application: Remember the insurance company can get access to all your past diagnoses and treatment, so don’t lie (it’s illegal).  However, if they ask you about the last 5 years, only go back 5 years- no longer.  So tell the truth but don’t tell them what they aren’t asking for…
• Be Prepared for the Exam:
  • Fast 8-10 hours before the exam
  • Stay away from caffeine 24 hours before the exam.  This can elevate your blood pressure.
  • Stay away from alcohol 72 hours before the exam.  This can mess up your liver enzymes.
  • Try to stay away from pain meds, sinus meds, and any herbal medicines 24 hours before the exam.
  • Do not exercise in the day of your exam (before the exam that is).  This can cause increased protein in your urine.
  • Try your best at a healthy diet the week before the exam.  Lowering the salt and excess fatty-foods will help.
  • Do NOT go on a crash diet before the exam, this will just throw your body out of whack.
  • If you get sick, even a small cold, cancel the exam and reschedule when you are 100% well.
  • Just like all those college exams, get a good night’s sleep before.
  • If you haven’t already- STOP smoking.  (This should be done 6 months – 1 year before the exam)

One final thought- if you’ve been thinking about going to the Doctor for a problem, but haven’t made it there yet, wait to make the visit after applying.  Of course, if it is something serious- by all means, go to the doctor!  In my case, I had been having breathing trouble, but figured it was my life-long asthma that got out of control.  I waited until after this entire life insurance process was over before seeing a doctor and I am glad I did.  Now the doctor is saying it looks more like emphysema, which I am sure would have kicked me straight out of the Super Preferred tier.

• I decided on the amount.
  I went with $250,000. For our situation, I think this will work. You can find more about how much life insurance you need at All Financial Matters

• I got quotes.
  • My Home/Auto Insurer, State Farm: I contacted my agent and asked for a quote. Simple.
  • Online Insurance Companies: I went to Zander.com, lifeinsure.com and compared quotes.
• I decided on the Insurance Company
  My rates were mostly between the $18-25/month range. I went with State Farm for a number of reasons. For one, I trust them. I know that if I have any questions, I can call someone and get a human right away. Also, their exam and medical digging seemed simpler and easier than the other guys. It’s not that I am sick and trying to hide it, but I have complicated issues that in no way will make me die earlier. I just don’t want some idiot who doesn’t know what the hell a heme group is to make a dumb decision that I’m unhealthy when I’m not.
• I filled out an application with the agent. My agent was nice enough to meet me at the Starbucks just down the street to fill out the application and get everything started.
  This included:
  • The usual paperwork with name, address, and signing.
  • Medical questions: Do you have diabetes, high blood pressure, heart disease, etc. What have you been to the doctor for in the last 5 years… That was a task.
  • Lifestyle questions: Do you jump from airplanes, scuba, jump off bridges for fun?
  • Then I gave him a check for the first month’s estimated payment. He let me pay the best-case-scenario price, but it may be higher depending on how risky they think I am.
• I had a Medical Exam done.
  This included:
  • Blood test for cholesterol and other levels.
  • Urine test. Not sure what for. Maybe a drug test?
  • Weight and Height.
  • Blood pressure.
  • Pulse.
• Now I am just waiting on the results of the exam/underwriting to see what my rate ends up being. However, since I already paid my first month when meeting the agent, my coverage has actually already started.

First of all, who knew there was more than one type? In fact, there are all sorts of flavors of life insurance from your plain ole vanilla to your fancy pistachio.

• Temporary
  • Term Life Insurance. This kind is temporary and is the cheapest. You pay a premium, which may or may not fluctuate depending on the policy, and if you keel over before the ‘term’ of the policy, they pay your beneficiary the face value. So you can buy a 1 million policy for 30 years and you pay $X per month. If you die anytime within the 30 years, your beneficiary gets 1 million dollars. If you don’t die within the 30 years, you don’t get anything- but hey, you are alive!
• Permanent
  • Whole Life Insurance. With this kind, you pay a level premium but your money goes into an account that creates an actual cash value for you. This account grows at a rate set by the insurance company, which is sometimes not a competitive savings rate. After years of paying, this cash value can be accessed by means of a loan. At the time of death, whenever that is, the death benefit is paid but this cash value is not paid. Whole life is more expensive at first, but can level out over the years.
  • Universal Life Insurance. This one is similar to Whole Life, but the savings rates can be higher (they follow the market) and the premiums are flexible. Once the cash value reaches a set point, you can stop paying the premiums. However, because this one is more flexible and interest rates follow the market, if interest rates are low, you could end up having to fork over extra money in premiums just to keep the policy.
  • Variable Universal Life Insurance. Similar to Universal but the cash account is held in a separate account that can be invested in mutual funds and is managed by a fund manager.
  • Endowments. This kind is much more expensive. These are paid out rather you live or die after a set number of years or a set age.
• Accidental Death Insurance. These are the cheapest because they very rarely pay out any benefit. As you can guess, you only get paid if you die from an accident or injury (not an illness). You can also get accidental death insurance as a rider to your regular life insurance and it generally doubles the payout if you die from a freak accident (ie. entire cast of final destination).

So which one is best? Well, I recently had a ‘financial advisor,’ that my mom swore was legit, attempt to convince me that a variable universal policy was just perfect for me. Once I researched it, I found that it was actually me buying the policy that was just perfect for HIM. Why? Because they make huge commissions off of these sort of policies. So they will try to sell it regardless of your situation.

Here is why. Your totally unbiased ‘advisor’ is making 75-100% commission off your permanent insurance premium the first year, then about 5% for each additional year you pay. Sounds like a sweet job, right? Well, when they sell you term insurance, they only make about 30% off your first year then about 4% a year for your term. So if we do the math, on a 1 million policy, thats the difference between about $5,000 for permanent and $1,000 for term. They sell these hard because for the same time/work they make about an additional $4,000 per million dollar policy (that’s a 500% gain).

I decided to go with the term policy. From all the research I have found (from people NOT invested in the sale of such policies) it is generally best to keep your insurance and your investments separate.

You see, if you take care of your finances (pay down debt, increase savings) then you really won’t need a life insurance policy in the latter part of your life. By only getting a term policy for the duration of my mortgage at a MUCH cheaper price (mine was 4% the cost of permanent), I am able to save the difference into my retirement and general savings accounts. Here, I make a higher return and I pay less in fees. Once my mortgage is paid for, my term policy will be over and if I die at that point my husband will have nothing to worry about. Our mortgage will be paid off, our debt will be paid off, and he will have a nice savings to cover any expenses, you know- like mummifying and gold-leafing my corpse.