By: Revanche

Life insurance comes in all kinds of flavors

January 26, 2009

and prices. Whooo, the prices!

I don’t know how frequently I’ve talked about getting life insurance, separate from my employer-sponsored plan, but I’m pretty sure I called last March the month of insurance. What a liar.

Well, it took me two days to get my butt in gear THIS time, but I’ve finally requested quotes from a variety of companies, and they really run the gamut.

I started with looking for companies with higher ratings on A.M. Best, but that kinda just confused me, and wasn’t terribly fruitful. I came up with the following: AAA (wouldn’t give me an online quote), Mercury (doesn’t do life insurance), Wawanesa (also doesn’t do life insurance), Commerce West (again, same story).

Finally, I just gave up on the A.M. Best angle, clearly that was going about things backwards. It was time for known quantities and Googling. Mostly Googling because not many of my friends have life insurance. I also wasted about 30 minutes lecturing a friend about how important life insurance was; it’s not hypocrisy, she’s pregnant! With a child. Life insurance is critical! Of course, I’ve got dependents already, so why was I still on the phone and not getting quotes? Right right.

So, friends: one gal has her policy through Farmers, but “it was through hubby’s friend, and I don’t know if I got a good deal.” And work: provides life insurance through Prudential. Good enough, I started with those two companies and worked up quotes for both.

The baseline information was: 26 yr old Female, short, thin, non-smoker with no family history of cardiovascular disease, cancer, etc., for a 30-year Term policy for $2 million.

Honestly, that number was initially just a randomly chosen number, but after I used a few calculators to estimate my family’s insurance needs given existing debt (I don’t have any but the padres do), living expenses for 20 years (my people can be long-lived), and existing savings, it came extremely close to that $2 million. Crazy, huh?

And I chose term life after reading so very many articles arguing the merits of term versus whole life insurance. Jim at Blueprint for Financial Prosperity explains the differences here. Most term policies have the option of converting to a whole life policy, but I’m not certain that’s really necessary. Then again, I might be looking at this wrong: with auto insurance, I’m accustomed to shopping around and being able to replace my existing policy at any given time. That’s probably not the case with life insurance, you probably don’t want to have to be re-insured at a later time in life because, theoretically, you’re going to be facing higher rates. Then again, the rates can be pretty high just for term, I’m not sure I could afford whole life.

Anyway, the quotes ranged pretty wildly.

The lowest bid came from Prudential: $965 per year.
The others came in at $1000/yr (Midwestern), $2400/yr (Farmers), $1500/yr (Liberty Life), $1300-2700/yr (State Farm).

All the above companies were fairly highly rated, they’re all at least A ratings, with a Stable indicator. Of course, most of the ratings were from last spring so there’s certainly a chance that they aren’t doing as well now.

Now that I’ve taken that first step, and requested a few applications, I’m not really sure how to choose. I feel the need to do more research on the actual policies: coverage, restrictions, etc. Also, it’d be great if I could select a company that provides both auto and life coverage for a discount.

In any case, if I plan to pay the annual fee in full, though, the insurance fund is going to need a boost. Just at the wrong time, too!

Has anyone else gone through this selection process or care to share what sort of life insurance you have?

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