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Cut insurance costs
Paying too much for insurance?
Simple solution: Shop online and switch policies.
Ethan Roberts, who owns a catering business in Los Angeles, was skeptical about pitches from life-insurance companies offering super-low rates. To check them out, Roberts, 39, went to online insurance broker AccuQuote.com and typed in information about his medical history and activities.
Within minutes he received several companies' rate quotes. As a result, he bought a 20-year, $250,000 term-life policy from GE Capital, cutting his premium in half compared with the cost of a similar State Farm policy he purchased just a year and a half ago.
Roberts's experience isn't a fluke. Rates on term-life policies have plummeted over the past decade. In 1994, a healthy 40-year-old man would have paid at least $995 per year for a $500,000 term-life policy with a 20-year rate guarantee. Several companies offer the same policy today for less than $400, according to Byron Udell, chief executive officer of AccuQuote. "Overall, term-life prices remain at all-time lows," says Bob Bland, CEO of Insure.com.
Many big-name companies have jumped on the low-rate bandwagon. Even if you bought a policy just a few years ago, as long as you're healthy, you can probably find a much better rate or lock in the same premium for a longer period. You may also save on a policy purchased more recently if you neglected to shop around the first time.
That's the lesson Ethan Roberts learned. To buy his life insurance, he originally turned to the State Farm agent he works with for auto and homeowners coverage, without bothering to compare rates.
But thanks to online-shopping sites, such as AccuQuote.com, Insure.com and InsWeb, it's easy to get price quotes (and arrange to purchase a policy) from dozens of companies. It may also be worth your while to get online price quotes for auto insurance. A number of insurers are changing the way they calculate premiums, which can mean substantial savings for low-risk drivers.
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In the past, auto-insurance rates were based on a handful of variables, such as the type of car you own, your age and your driving record. Now companies are using advanced computing capabilities to look at dozens of variables.
Allstate, for example, went from seven pricing tiers to 384, says spokesman Michael Trevino. To determine premiums, the company uses many variables in your credit report, as well as the correlation between the type of car you drive and your potential liability. "We were able to lower rates by about 25% for people who are the best risks," says Trevino.
New pricing rules also mean that some high-risk drivers can get coverage from insurers that shunned them in the past. Premiums may be high, but at least you won't be turned down.
Some individuals who aren't the best risks under the new system (such as those with poor credit records) may do better with a company that hasn't changed the way it determines prices. Whatever your situation, you can shop more efficiently at Allstate.com, Progressive.com, StateFarm.com and InsWeb, which works with a number of insurance companies.
-- Kimberly Lankford
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