The Truth About Home Warranties And Are They Worth It?

When you buy a new home you always have the option of purchasing a home warranty that, theoretically, covers the cost of repairs to various appliances and other home systems. But are these home warranties worth it and what should you be aware of before you actually buy one of these?

Before I get into some of the nuts and bolts behind these home warranty products let me explain that I actually managed the extended warranty program for Circuit City Stores for a period of time and these home warranties are a very similar product. In addition, I've studied the economics of insurance before and home warranties are basically insurance policies. So I know a fair amount about the economics of home warranties.

A Home Warranty Is An Insurance Policy

When you buy a home warranty - and they start around $420 - you are basically buying an insurance policy. The reason this is important to recognize is that insurance companies are in business to make money and that means that they expect to make money on the average policy they sell, which means that on average the people who buy these policies will lose money. Buyers will most likely pay more for the policy than they receive in return over the life of the policy.

Then why would you ever buy an insurance policy? Because you are willing to trade off the certain cost for a very uncertain cost. The insurance company can play the averages game but many consumers cannot or don't want to play that game and they are willing to pay a premium for the certainty. This is especially true as it relates to health care where a catastrophic illness can cost over $1 MM.

But when it comes to home appliances and other systems what is the worst thing that can happen? Maybe you need a new air conditioner or a refrigerator that might cost you a couple of thousand dollars. So for people who can handle that type of expense out of the blue, there is no need for them to buy an insurance policy - they basically "self-insure" from their own savings. But if a new air conditioner would break the bank then you might want to consider getting a home warranty.

How To Beat The Home Warranty Companies At The Averages

There is one advantage that the homebuyer has over the home warranty companies. They know more about what is being insured than the warranty company does and this asymmetrical information allows them to make a better decision about when to buy the warranty than the companies can make about when to sell the warranty. In fact, the companies will pretty much sell a policy on any property to any buyer because they just can't afford to inspect every home before issuing a policy. But a buyer is going to be more likely to buy a policy when they can see that a home has been poorly maintained - e.g. a trashed short sale - and is, therefore, more likely to develop problems. That's what I did when I bought my short sale. I bought a policy from Home Warranty.

This asymmetrical information leads to a problem for the warranty companies called adverse selection - the tendency of these companies to get stuck with bad deals. Consequently, they have to raise their prices to offset this bias, which means that anyone who buys such a warranty on a well-maintained property is overpaying.

Beware The Exclusions

It's important to understand what you are really buying when you get one of these home warranties. The contract is full of fine print which excludes a huge list of situations that you would reasonably expect to be covered such as:

  • Improper installation
  • Plumbing fixtures
  • Whirlpool jets
  • Ejector and sump pumps
  • Doorbells associated with intercom systems
  • Alarm system repairs above $400
  • Security video equipment
  • Central vacuum cleaner repairs above $400
  • The remote components of an automatic garage door opener
  • Ice and water dispenser in a refrigerator. In fact, it's not even clear if they cover the ice maker in the standard policy. I don't think they do.

That's just a small sample of my BestWayInsurance Home Warranty contract. The entire list is enormous. But you can buy a higher cost policy that will cover some of these excluded items. Like I said...these guys are in business to make money.

Beware The Pre-Existing Condition

Just like in healthcare these home warranties have pre-existing condition clauses. When you call in a claim they will ask you a series of questions and if your answers indicate that you don't know for sure that this item ever worked properly since you owned the home then they will simply deny the claim. Now you can buy a premium plan that will cover unknown pre-existing conditions but, even then, if they somehow determine that you knew the item wasn't working when you bought the plan they will deny coverage.

Beware The Deductible

Just like in healthcare you have to pay a deductible for every claim made. On my Home Warranty contract, it's a trade call fee of $100.

The Warranty Company Does Not Guarantee All The Work Performed

This one really burned me up. The home warranty companies contract with various repair companies to actually perform the work and they will make sure that your reported problem is ultimately solved. However, apparently, and once again I can only speak from my experience with Home Warranty if the contractor's work directly or indirectly damages your home or appliance you are on your own to work out the issue with the contractor. BestWayInsurance will do nothing to help you resolve the issue other than note a complaint in their system for future reference in dealing with the contractor even if BestWayInsurance sent out an unqualified contractor in the first place.

For instance, we had a gas leak in our dryer and BestWayInsurance sent out Bender's Plumbing of Addison to fix it. They fixed the leak but after they left we discovered that the dryer was no longer venting outside. Bender's Plumbing was dispatched again to fix this problem but incredibly they decided it wasn't their problem. Reluctantly we paid an appliance repair guy $80 to fix it and he explained that when Bender's moved the dryer the vent hose disconnected and was then crushed as the dryer was moved back in place. If Bender's had known what they were doing they would have opened a panel on the front of the dryer to reconnect the hose and pull it out of the way as they slid the dryer back in place.

Bender's initially promised to send me a check for $80 but it never arrived and then they wouldn't return my phone calls. And even though BestWayInsurance should never have sent out a plumber to do an appliance repairman's work they refused to help resolve this dispute.

Your Realtor Gets A Commission For The Sale Of A Home Warranty

And this is a lesser concern because it does not involve a lot of money but your realtor does get paid a small commission to sell a home warranty. It's around $70 I think, which is such a small amount that my company rebates it back to our clients to avoid any conflict of interest however small. But you should still be aware of this because some realtors will do anything for a buck.

Keeping Your Teen Safe at Home

When I was a teenager, I would come home from school hours before my parents got back from work. Sometimes I wonder if they ever worried about me being at home alone—whether I was getting up to any teenage mischief or not. Unless they called, there was no way for them to know.

Nowadays there’s texting, which certainly helps this problem. But your security system can also be a huge help in knowing your kids are home safe and behaving well.

SimpliSafe Components That Go the Extra Mile:

SimpliSafe has lots of customizable features that allow you to create a solution that fits your family’s needs.

The SimpliSafe security camera records videos any time your system is tripped, but did you know it also records a short clip anytime the system is armed or disarmed? It’s great for checking in on who’s home. You can see which friends your teen has over. Is it their study partner or that bad apple from down the block? You can check in any time. And don’t worry. The privacy shutter on the camera gives you and your family privacy when they’re home.

You can also set up your system so that each member of the family has a unique PIN. That way you’ll know who’s arming and disarming the system. Not only will you know your teen got home safe, but you’ll know they remembered to arm the system again after.

Another great feature to take advantage of is the SimpliSafe app. With interactive monitoring, you can arm your system remotely when your teen forgets. You can also check to see when they armed or disarmed the system (a surefire way to know if someone’s been breaking their curfew).

If your kid is old enough to stay home alone overnight, SimpliSafe will give you the peace of mind they’re protected, even when they’re asleep. They’ll have the backup not just from our monitoring center, but from the local police as well. Plus, you’ll also have the peace of mind that if they throw a wild party you’ll catch them red handed.

Entry Sensors & Secret Alerts:

We’ve heard of customers using SimpliSafe sensors in creative ways to keep an eye on their teens. Some like to install Entry Sensors in unusual places like liquor cabinets to know when someone is getting into somewhere they shouldn’t be.

Of course, you probably don’t want the police called if your kid happens to open the liquor cabinet. That’s why SimpliSafe has Secret Alerts. You’ll get a text if that sensor is tripped, but the alarm won’t sound and the message won’t be sent to SimpliSafe’s monitoring. It’ll be between you and your teen.

You can also use Secret Alerts to get a text if they’re sneaking out at night, or if they’re taking a peek at those Christmas presents hidden in the closet (we never get too old for that, do we).

Give Them Responsibility:

Part of keeping your kids safe is teaching them how to keep themselves safe. So give your teen some responsibility in protecting your home. If your teen is the most likely person to be at or near your home, consider making them a primary or secondary emergency contact. Teach them what to do and practice the emergency plan together.

If there are younger siblings, have your teen teach the little ones how to use the system and what to do in an emergency.

You can also give your teen access to the app. This way they can also arm and disarm from a distance, and check in on what’s going on at home. You can even work the app as part of their chores, like keeping an eye on the pets.

Life Insurance for Business Owners

Are you a small business owner or a co-owner of a company? Among the many days to day responsibilities you encounter, you also are responsible for your family. You need to protect your family at home as well as your business family.

Life Insurance for Business Owners

Life insurance for business owners can help lay a proper financial foundation by protecting your current and future business. Let’s look into the different situations that life insurance can benefit your company or business.

Collateral Assignment Life Insurance

A life insurance policy can be used for business owners that require cash to begin a business or buy a company. Typically, when you buy a life insurance policy you will name a beneficiary. This beneficiary has an insurable interest to the insured. This beneficiary can be a family member, spouse or a business partner or company. When you’re getting a life insurance policy for an SBA loan or bank loan – it is the same overall concept. You have to assign a primary beneficiary, however- the lender will be named the collateral assignee. If you were to die the lender will get the balance of the loan from the life insurance death benefit. Your primary beneficiary will then get the balance once the loan is paid off.

What would happen in the event that you didn’t use a collateral assignment? If you had the lender the sole beneficiary, the lender would then collect one hundred percent of the life insurance policy’s death benefit. BestWayInsurance life insurance can help you avoid that.

Executive Bonus Plan Life Insurance

With an executive bonus plan, you’re using a compensating method for specific employees by paying the life insurance policy premiums on the key employee’s life. The employer or business owner will pay for a benefit that is owned by the executive or employee. There are benefits to both the employer and employee when it comes to Executive bonus plans.

For the employer, there is no administration needed, the plan is simple, and costs are tax deductible. For the employee, the executive is the owner of the life insurance policy and of the cash values. The policy is not lost if they were to change employers. The death benefit can be income tax free.

Key Person Life Insurance

The purpose of key person life insurance is pretty basic:

A company buys a life insurance policy on a key employee, business owner or executive who is very important to the business. The company will apply for a life insurance policy, pay for all of the premiums and own the policy. The business is also the beneficiary of the life insurance policy. If the key person were to die, the company will receive the death benefit of the key person. The tax-free benefit can be used in a variety of ways. It can help make up for company sales as well as lost earnings. The benefit can also help cover some or all of the costs of finding a good replacement and provide proper training.

What would happen if the key person were to die unexpectedly? Could your business move forward without a hiccup? The life insurance death benefit can provide liquidity quickly so you can provide ongoing financial demands.

How about securing loans for your company’s growth? Sometimes loans are needed to help with the financing opportunities of expanding a business. Your lender will often seek collateral as security and the death of a key employee may pose too much of a risk to your lender. It is very common for a lender or bank to require key person life insurance on anyone that is vital to the life of your company.

One of the most important uses of key person life insurance is when there’s a need to buy out a deceased co-owner's interest in a company. There are some unfortunate situations that can arise if a key person policy isn’t in place. How would the deceased co-owner's family receive their share of the interest in the business without selling it off? How would the surviving owners pay off the dead owner’s family in order to avoid becoming partners with them?

Buy Sell Agreement with Life Insurance

When you’re an owner of a company or a partner in a business, a buy sell agreement can be an excellent way to avoid uncertainty. When a partner or company owner dies, the life of the business and it’s future are uncertain. With a buy-sell agreement, you can make sure you’re helping to protect you and your company from the unexpected or unintended transfer of ownership. By considering a buy sell agreement and funding it with life insurance, you can provide protection and extend the life of your company.

The buy sell agreement will aid the sale and purchase of a company based on a specified event. The most common events are retirement, disability or death of the owner of the company. The buy-sell will lay out specifically who will get what with regards to shares of the business. It will define how much and it will guarantee the buyer at a predetermined price. The buy-sell agreement also allows for the purchasing of company shares from the estate of the surviving family. Lastly, a buy-sell can be beneficial with creditors. Creditors will most likely be much easier to deal with when they can see that a company has protection established to make the loan decisions easier.

Business Succession Planning

Life insurance plays an important role as the driving force in succession planning. It is key that you have adequate coverage for you and your business partners. You need to get a formal valuation of your company and make sure that your coverage is updated with the growth of your company. Succession planning is a very important topic and can be vital to your business. If you let the estate plan dictate how your company transitions, it may cause significant issues. There are many companies that have had disastrous results due to poorly designed succession plans. Just ask the Robbie family and the Miami Dolphins.

Get Started

If you’re ready to get started, make sure you work with the following 3 resources:

  • Attorney
  • CPA
  • Life Insurance Broker

You’ll need experts in each of these areas in order to secure the best strategy and policy for your business succession plan.

How to Get Quotes and Apply

Once your plan is in place you can begin shopping for your life insurance policy. Simply use the free quoter on this page to get an idea of rates.

However, the best way to secure coverage is to have our research customized quotes. You can simply contact us at BestWayInsurance.com.  We’re independent and licensed life insurance agents. We’ll find you the best policy at the most competitive price from dozens of top rated life insurance companies. Once we find you the lowest rate, we’ll help you apply conveniently online or over the phone. We’ll help you from start to finish.

Used Car Buying: Getting the Timing Right

Want to get the best bang for your buck when looking for a used car deal? It comes down to three factors: What you buy when you buy, and where you buy it.

What you buy will have the greatest impact on the used car deal that you get, and if you make your purchase at the right time you can save big.

It’s an interesting time to buy used, with the average retail used car price reaching a new record high in the first quarter of the year across the broad market, but with low prices in some segments and an increasing number of lease returns set to drive prices down across the board. According to automotive researcher Edmunds.com, the rate of three-year leasing grew 27.1 percent between 2012 and 2013. Those cars leased in 2013 are now flooding the used car market.

In many ways the record high transaction price is more of an indication of the type and age of vehicles coming into the used market, rather than the trend for any single model. SUVs and high-trim pickups make up a growing portion of the lease segment, and their return into the used car market is one factor skewing the average used car market price upward.

Most cars and trucks coming off lease are only 3 years old, and they’re being returned in great shape to avoid excessive wear charges, and they have low miles to avoid excess mileage charges. Those attributes also contribute to their higher prices in the used car market. In short, used cars today are newer than they have been and therefore more expensive.

What to Buy

To find the best deals, look where the new car market is heading and go the opposite way. Sales of compact SUVs are hot right now, and many of those buyers are moving to them from sub compact, compact, and midsize cars. Low fuel prices and the steadily improving economy have increased the demand for truck and SUVs, while sales of smaller cars have languished.

“Interestingly, some of the less popular segments in today’s market were the most popular leased vehicles in 2013: mid-size cars, compact cars and entry luxury cars,” said Edmunds analyst Ivan Drury in a recent press release.

That means it’s a great time to be looking for cars like the Honda Civic, Hyundai Sonata, Mini Cooper, Acura ILX, or Cadillac ATS. Those smaller cars and midsize sedans are being returned in excellent condition with low miles when their leases end, but the supply is outpacing the demand, creating opportunities for buyers.

More opportunities come from owned compact and midsize vehicles that are being traded in as down payments on SUVs and crossovers, though they’re likely to be older with higher mileage.

When to Buy a Used Car

Toyota Motor Sales, U.S.A. Inc.

Seasonal trends can also create chances to get a great used car deal. Typically, used car prices are at their lowest in the early winter, with dealers looking to reduce inventory just before the end of the year. Prices then typically climb through the spring and summer months before starting to decline through the late fall.

If you’re looking for a specific vehicle, you can learn from some annual trends. As summer approaches, demand for convertibles naturally rises. When winter nears, prices for all-wheel drive vehicles, crossovers, and SUVs climb. Buy a convertible in the late fall or an SUV in the spring, and you can save some money.

Fuel prices also have a great impact on buying behavior and used car prices. The current surge in SUV and pickup buying is being driven in a large part by cheap gas prices. That has also reduced the demand for small vehicles and alternative-fuel cars and trucks. With cheap gas and a redesigned Toyota Prius recently arriving on the market, it would seem to be an excellent time to buy a three-year-old Prius or any of the other hybrid models available.

When fuel prices start to rise – and they certainly will at some point – many trucks and large SUV owners will start to see their total cost of ownership dramatically rise. Those thirsty cars and trucks will begin to flood the used market.

Pickup trucks are an interesting segment of the market. There are two typical buying groups, including those who buy their trucks for work, use them hard, and keep them forever. The pickup lease customer, on the other hand, often has a higher trim level truck with more high-tech features. The fancier trucks typically depreciate at a much faster rate, even though very few ever leave the pavement or do much hard work. The technology that was expensive when the lease was signed isn’t state of the art three years later when the lease expires, and used car buyers don’t put as much value on the extras as new car buyers do. The premium trucks can offer excellent value when purchased on the used market and are durable enough to have long lives with their second owners.

Where to Buy

Where you buy is usually a reflection of your risk tolerance. Many buyers find it more reassuring to buy a used car from a franchised new car dealer rather than an independently used car outlet or a private party. While you can potentially get a better price from the latter two, many buyers don’t have the confidence or knowledge to take that leap.

Franchised new car dealers, on the other hand, have the greater overhead that you will help pay for with a higher price on your used car purchase. Many also offer certified pre-owned cars that come with a certain level of inspection, refurbishment, and often a warranty and special financing opportunities, along with a higher price tag.

U.S. News & World Report’s used car site offers a number of tools for shoppers including rankings and pricing tools, plus a search system that can find cars and trucks in your area. Find out how much car you can afford using our calculator, and be sure to have your own financing lined up before you step foot in a car dealership.

Do Home Warranties Cover Plumbing?

Let’s face it; plumbing issues stink! Plumbing is one of those home systems we tend not to appreciate until there’s a problem with it. They can occur without any warning making for an unpleasant surprise that you have no choice but to address immediately.

Plumbing problems aren’t just unpleasant; they can also be expensive. Not only does the issue itself needs to be remedied, but also leaked water can cause several residual issues such as floorboard rot, drywall damage and mold, among others.

Related: A Guide To Leaks, Clogs, And Other Plumbing Issues You Can Fix

The average cost to hire a plumber for a typical job ranges from $160 to $430. Plus, plumbers often charge an additional premium to come out on evenings or weekends. The cost of parts for the repair can vary widely, especially in older homes where replacement pieces are harder to find.

What Do Home Warranties Cover?

If you’ve been asking yourself whether you should invest in a home warranty, the first step is to look at what’s covered under the warranty. Each plan is different and coverage can vary.

BestWayInsurance Home Warranty plan covers the costs of repairing or replacing more than 20 major appliances and home systems, including plumbing. There are flexible plans that allow you to choose the best fit for your family’s needs and you can even build your own custom plan so you have the exact coverage you want.

Do Home Warranties Cover Plumbing?

Generally speaking, home warranties do cover plumbing when issues result from normal wear and tear. Not every plan is created equally, though, so it’s important to look at what exactly is covered, especially if you already have a contract. Some of the common plumbing troubles covered by AHS include:

  • Leaks and breaks in the water, gas, drain or vent lines
  • Faucets, shower heads, and shower valves
  • Built-in bathtub whirlpool motors, pumps, and air switches
  • Clearing sink, tub, shower and toilet stoppages

Be sure to check the yor contract for more details.

Give Yourself Peace of Mind

Unfortunately, plumbing issues are inevitable in any home. Since the best plan is to be prepared, you can ease your stress by giving yourself the gift of an American Home Shield plan.

Do All Parents Need Life Insurance?

In May we celebrate and thank Mom for everything she does.  In June we celebrate and thank Dad for everything he does.  In July we celebrate and thank them both!  Did you know that the fourth Sunday in July is National Parents’ Day?  Parents deserve thanks every day, but three national holidays dedicated to them is a good start.

I imagine that being a parent is the most challenging, yet rewarding, experience you can ever go through.  When you have your first child, you realize the world is bigger than just you.  As you make decisions in life you think “How will this affect my kids?”  Buying life insurance is one of these important decisions.  “If I die and don’t have life insurance, what happens to my kids?”

Buying Life Insurance
Pros:
  • Children can stay in their childhood home
  • Surviving spouse can afford to take time off work to spend with children
  • Family’s standard of living won’t need to change
  • Spouse can afford to send children to college
  • It can be customized to fit in most budgets
Cons:
  • It’s not free

There are all kinds of parents:

  • Married spouses who co-parent
  • Divorced individuals who co-parent
  • Unmarried partners who co-parent
  • Single parents
  • Stay-at-home parents

No two parents are the same, but you know what they all have in common?  They all need life insurance to protect their loved ones should they die prematurely.  Term life insurance is affordable and provides many benefits.

Term Life Insurance for Married Parents

There is a gender gap in life insurance.  Fewer women than men have life insurance and, in addition, own less coverage on average.  If you have children and you both bring home a paycheck, you both need life insurance.  If you have children and only one of you brings home a paycheck, you both still need life insurance.

Is it written somewhere that dad is more likely to die unexpectedly than mom?  No.  You never know what life may bring – both parents need to own life insurance.

Married same sex couples need life insurance as well.  Same sex couples raising children need to think about what would happen if one or both of them should pass away.  With same sex marriage being legal across the U.S., same sex couples won’t have any issue purchasing life insurance on one another or naming each other beneficiary.

Term Life Insurance for Divorced Parents

In most cases, divorce doesn’t change the fact that you both love and care for your children.  Both parents need life insurance.  In fact, in some divorce cases the court may order the parents to buy life insurance policies to ensure the financial futures of the children.

In amicable divorces, some choose to leave their ex-spouse as their policy’s beneficiary still trusting that they will put their children’s needs first.  Others choose to change their beneficiary to their children.  However, if the children are still minors then an adult custodian would need to be named instead.

Term Life Insurance for Unmarried Parents

On average, today couples are postponing marriage, but not necessarily postponing having children.  You don’t have to be married to buy life insurance on each other, but it’s easier to prove insurable interest this way.  (Insurable interest exists when you would feel financial consequences upon the death of another person.)  However, having children together is proof of insurable interest.

You could also opt to own your own life insurance and name your partner as a beneficiary.  Be sure you name a contingent beneficiary whom you trust to use the policy benefit for your children in case both you and your partner die at the same time, such as in a car accident.  If you both pass away and you named no one else as a beneficiary, the policy benefits are then added to your estate and held up during the probate process as a court decides what to do with the money.

Term Life Insurance for Single Parents

Arguably, single parents have the greatest need for life insurance.  There is no other parent for your children to fall back on if you should pass away.  Making a plan to protect them financially if you are suddenly no longer around to provide is essential.  You’ll want enough life insurance coverage to replace your income, pay for child care, and cover your final expenses.  It’s also critical that you choose a responsible guardian who is willing and able to care for your children should you die.

Typically couples will name each other as beneficiaries since they hope one will survive to care for the children, single parents should consider creating a trust and naming it as the beneficiary of the policy.  Minor children cannot receive life insurance death benefits so a trust can be set up to ensure the death benefit is distributed and used according to your wishes.

Term Life Insurance for Stay-at-Home Parents

Term life insurance is always explained as “income replacement” so if you don’t provide an income, then you don’t need life insurance, right?  Wrong.  A stay-at-home parent may not generate an income, but this allows a family to save money by not hiring out for various responsibilities such as child care.  According to Care.com, child care is the largest annual household expense, averaging $18,000 for U.S. families.  If a stay-at-home parent were to suddenly pass away, would the surviving parent be able to find an extra $18,000 per year to hire someone to care of their children while they were at work?  What about someone to clean the house or transport children to and from school and extracurricular activities?

It’s a mistake to think that life insurance is only for breadwinning parents.  Unless the family is considerably wealthy, the mortgage is paid off, and there is a substantial amount in the savings account, a stay-at-home parent needs life insurance too.

How much does term life insurance cost for parents?

Term life insurance is quite affordable and the term length and coverage amount can be customized to fit in most budgets.  A term policy can ensure your family is able stay in their home, provide funds for college tuition, and pay for your final expenses should you die unexpectedly.  How much life insurance you need depends on your individual situation.  Consider the following questions.

  • Do you have debt you want life insurance to pay off? For example, a mortgage, student loans, credit cards, or car loans.
  • How much monthly income does your family need? The amount your paycheck provides is a good place to start.
  • How many years do you think your family needs that monthly income before they are financially stable?

Remember: term insurance is structured to only last a specific period of time – typically when your family is most financially vulnerable.  How long you want the term insurance to last depends on a few factors such as how young your children are, how much time you have left on your mortgage loan, how close you are to retirement, and what your budget is.  For example, if your children are teenagers and you only have 10 years left on your mortgage, you probably don’t need a 30-year term policy.  However, if you just had your first child and want to make sure your child will have the funds to go to college, and recently purchased your first home, then you’ll want to consider at least a 20-year term policy.

Let’s take a look at some numbers to get an idea on how much life insurance costs.

Example:

 

The debt you want paid off if you die:

  • Mortgage loan = $215,000
  • Credit card debt = $10,000

The monthly income you provide: $4000

How many years your family will need this income = 5 years

Using the Needs Analysis Calculator on our website, $465,000 in coverage is a good estimate.  (Or you can manually add up 215,000 + 10,000 + (4000 x 12×5).) We’ll round up to $500,000 in the table below.

Your children are two and five years old.  You decide you want your term policy to last until they both are at least 25 years old so you decide a 25-year term policy is best.

 
Estimated Monthly Cost of a 25-Year $500,000 Term Life Insurance Policy
Healthy 30-Year-Old Male = $29 Healthy 30-Year-Old Female = $25
Healthy 35-Year-Old Male = $34 Healthy 35-Year-Old Female = $29
Healthy 40-Year-Old Male = $48 Healthy 40-Year-Old Female = $40
Healthy 45-Year-Old Male = $76 Healthy 45-Year-Old Female = $58

Do the costs surprise you?  Americans overestimate the cost of life insurance by as much as 213 percent, meaning some people think that a healthy 30-year-old male is actually going to pay $90.77 per month for the above policy instead of only $29.  That’s quite the difference.

As you can see, the cost of life insurance increases as you age and because women statistically live longer than men they have cheaper premiums.  Having some life insurance is better than having none at all, so if you are unsure you can easily afford the premiums of a 25-year $500,000 term policy, consider a 20-year term or decreasing the coverage amount.

It’s easy to try out different policy lengths and amounts on our quoting tool.  Easily find out premiums estimates for a 30-year $100,000 policy… a 10-year $500,000 policy… a 20-year $1,000,000 policy… you have many options.  Run as many quotes as you want – no contact information required and no commitment necessary.

If you have children, there’s no excuse to postpone buying life insurance.