Finding Cheaper Life Insurance

I am retiring from my job. I have a $l0,000.00 life insurance on my husband that is payroll deducted for the amount of $7.90 per month. I have had this insurance for l6 years. The payroll department has told me that when I retire that this monthly premium will raise to $84.00 a month. I cannot afford to keep this insurance at that price. Can someone help me. Thank you.
Jo L.

Jo does not say where she lives, how old her spouse is, or if he smokes or not. Those are all factors in determining the type of insurance available to her for him. A good place to start would be at http://www.quotesmith.com . At this site she can enter answers to each of the mentioned factors for life insurance amounts ranging from $25,000 to more than $1,000,000. For a $25,000 policy, a 65 year old non-smoking male in my home state of Ohio qualified for a policy for $424 per year for 30 years. That is considerably less than what her employer would charge for $10,000 in coverage. A similar policy in California is typically more expensive so I checked those numbers too--it can be had for under $600 per year--still a very significant savings for more coverage.

Jo can also check with any professional/social groups and other organizations she may be a member of. These organizations can get enough members together to qualify for group rates at a significant cost savings. My 37 year old spouse just got $100,000 dollars of term coverage from AAA for $178.00 per year for 30 years. That cost is relative to his age of course, plus he is a non-smoker. Look around and you will be surprised at the variety of options out there.
Michelle

Is this insurance term of whole-life? It sounds alot like whole-life to me. Insurance companies and agents love it because they make the most on it. It's like this. Over half of the first year's premiums go to the agent as his comission. The insurance like it because as you increase in age the payoff at death decreases from the original specified amount once the insured reaches a certain age and then again and again at regular increments. So out of all that money you have paid in you will very likely receive less than half the original if the insured lives past the age of 65, or whatever is specified. If you are retiring, your should be considering the age factor.

When my step-father retired from the military, I finally persuaded my folks to get term insurance and cash in their whole-life policies. They bought a new car and alot more with the cash-in values of all the policies they had. And none of them were going to pay them more than $5,000 in death benefits after the age of 65 and they dropped to around $3,000 about age 70. The premiums, I should mention, were over $100/month. Now they have a policy which pays a total of $50,000 in death benefits - $25,000 on each for $64/month. The death benefit remains the same whether they're 60 or 95! BTW, they've reached the age where they would have lost all those benefits had they kept the whole-life policies. Term is always the better choice, as a good insurance agent knows. My dad was an agent; I learned my lesson well.
Lynn

Why have life insurance, especially only $10,000? If you're retiring, I'm assuming that you've worked out your finances so that you can afford to live on your retirement income. If so, what will happen if your husband dies? Okay, surely, you'll be emotionally devasted, but will you be financially devasted? Remember, if he passes you still get his social security, his accrued retirement benefits, and all the savings/investments you've been living on during your retirement. If the $10,000 was only for his 'final' expenses, then start now to make sure you have that money in a savings account. If you have children, realize that they may help you financially with the final expenses, as well.

If you really do need life insurance on your husband to replace his income then $10,000 was never enough to see you through. Talk to an insurance broker to see what plans are available for his age and health. The insurance would then be money that you'd put into investments so you could live off the earnings. $10,000 invested at 10% return would only get you about $80 a month to live on - hardly enough. I'm hoping you don't need the insurance and you're investments and social security income are enough.
Catherine

Does your employer pay most of the premium for the life insurance? Also it is a 20 year term life? If it is term life, then the premiums are locked in for 20 years, this means that the insurance company can not charge you higher premiums. The premiums are based on the age when started, the height and weight, and if the person is a smoker or non-smoker. If the insurance premiums are mostly paid by the employee's then when you retire they can charge you the full monthly premium. It does sound a little high.
Joni J

Start shopping now, before you lose your low rate. Consumer Reports had a great article on shopping for life insurance in July '98. Most libraries subscribe.

I would call AccuQuote, toll free, at 800-442-9899. I liked them (as did Consumer Reports) because they ask quite detailed questions about your health, before quoting a low rate. Both my husband and I qualified for the rating level and premium cost as quoted. Whatever you do, don't drop the other policy until you have the replacement policy in place. If the physical exam turns up something you don't know about, the insurance company will probably still insure you, but the rate may be too high to be worth it. Good luck.
Ricka G.

Do you have a time or money saving idea that wasn't included in this article? Please send it to tips @stretcher.com. We get the best ideas from our readers!

If you liked this article why not sign up for our free money-saving email alerts? Your bonus? 209 ways to save on groceries.

Follow The Dollar Stretcher on Twitter.

I Would like to:

• Read other articles on this topic
  
• See what else is in this issue
  
• Subscribe to "The Dollar Stretcher" free weekly email newsletter
  
• visit the Problem Solving Center
  
• visit the Reference Library
  
• browse the 'author' index
  
• search 'by date' index
  
• check out Past Issues of Newsletter
  
• go see 'What's New'
  
• "Can You Help This Reader?"
  
• drop by 'Tips, Quips & Quotes'
  
• send email to the Editor of "The Dollar Stretcher"