When you get a quotation for term life insurance, the premium is fixed. There's no negotiation or bargaining because the insurance company has determined the price and there's no flexibility. But when it comes to permanent insurance, insurance designed to last your entire life, there is flexibility in the premium.
The reason there's flexibility in the premium is not because the insurance company will bargain with you or negotiate. Rather, a smart insurance professional may combine term and permanent insurance together to obtain the death benefit you desire at possibly a lower rate. Additionally, the insurance professional can design the policy with more or less risk meaning the policy's ability to withstand economic fluctuations without the need for you to contribute extra premiums in the future. Therefore, the lower life insurance premium comes with some increased risk.
Term insurance is the lowest cost type of insurance you can obtain. However, the problem with term insurance is that it becomes more and more expensive as you age. On the other hand, permanent insurance, like universal life or whole life, has a level premium during your lifetime. By mixing together permanent and term life insurance the gifted insurance professional can sometimes save money with the right combination. But the lower life insurance premium has a tradeoff. The lower premium today could result in higher premiums in the future or a reduced amount of insurance.
While neither of these future contingencies may come to pass, you must be prepared for them when you blend term insurance and permanent insurance in order to reduce cost. While many insurance buyers look at life insurance as a commodity product, this is not true. An experienced agent can provide advice regarding term, whole life, universal life or variable life and how to combine these products in order to get you the lowest premium and the highest amount of insurance within the parameters that are comfortable for you.
How can you find such a skilled professional? Generally, years of experience will tend to indicate that the agent has had more exposure to creative solutions. Additionally designations like chartered life underwriter or chartered financial consultant indicate an advanced level of study. Therefore the experience, education and talent of your insurance professional will often dictate your total insurance costs.
Are you paying more than necessary now? When you get a quotation from a life insurance professional, be sure and look at it carefully, especially the guaranteed column which shows the worst case.