November 22, 2017

Where To Buy Life Insurance

Where to buy? It used to be fairly easy to find a life insurance agent, but they are fewer and farther between these days. Largely because prices — and thus commissions — are so low. These days, your best bet is the Internet, where you can search for and compare policies on sites like Compare your options not only by price, but by the company’s rating, which tells you how financially secure it is.

• How much coverage you need? In general, it’s more than you think. There are a lot of rules of thumb floating and formulas floating around — many say you can just multiply your income by seven or eight — but I don’t like any of them. I think it’s better to actually take a look at your current income, and figure out how much of it your dependents would need to replace if you died. Be sure to take into consideration factors such as how long they’d need to replace your income, inflation, how they would invest the death benefit, and whether you want the policy to cover extras like paying off the mortgage, college, or an inheritance. You don’t have to do this on paper. We have a good calculator.

Choosing an Insurance Salesperson

Once you’ve picked out a policy, you can buy it directly from the company or through an insurance salesperson or broker. The cost will be the same, but it may be helpful to get some information from a local agent.

Salesperson v. broker. Normally, a salesperson sells for one company only, while a broker can place your policy with one of several. In theory, this would seem to be a reason to prefer a broker, but in practice, the integrity of the person you are dealing with is far more important than is the legal relationship to an insurance company or companies. Look for a person who will function as an ally, offering additional information and proposing alternatives — not forcing you to buy a product. If you get too much quick-sell pressure, contact someone else.

How to Find a Trustworthy Insurance Agent

Knowing you need a trustworthy agent and actually finding one are two different things.

Get recommendations. One of the best ways to find a good agent is to ask for references from friends, family members, and co-workers. Also, if you belong to a local group that puts out a newsletter or an email bulletin, post a note asking for recommendations.

Check the agent’s license. Insurance agents and brokers must obtain a license from the state in which they do business. Contact the state licensing agency and check to make sure the salesperson is licensed and doesn’t have any disciplinary proceedings pending. Many states provide this information online.

Check for complaints filed against the agent. You also might want to call the Better Business Bureau or state or local consumer affairs agencies and ask about the number of consumer complaints filed against the salesperson.

Comparison shop. Finally, speak with several agents and note whether the agent asks probing questions about your insurance needs or just tries to sell you a product. You should also compare the insurance products each agent offers to see which is the best deal and which best meets your needs.