Insurance provider suggestions

[lindseyc]

I'm located in Ontario just in case it matters. I am looking to investigate some new insurance options. Currently I have house, car and life with State Farm and I am paying far too much. Just some preliminary quotes online indicate I am paying $60-$80 more per month than I should be. Does anyone have some good recommendations for insurance providers? I have been with State Farm for so long I don't know much about what is out there.

[brunt]

This is not the answer that you are looking for, but you can easily overpay for life insurance that is more than you need.

The traditional thinking goes something like this - "you should buy whole life insurance while you are young and the premiums are low". This is great advice ... for the insurance companies that is.

The purpose of life insurance is to replace lost income for those depending on your income. Insurance is not now, and will never be, an investment. If you want investments, get investments. If you want life insurance, get life insurance.

By the above definition, when you are young, and without dependants, you do not even need life insurance, as nobody but yourself requires your income.

When you become a couple, your spouse may become dependent on your income, but unless they are severely disabled, they should be able to obtain in income in case of your untimely passing. In this case, a modest life insurance policy may be prudent. But most of the time, savings of a few months worth of expenses may be all that is needed.

Once you have children, things become more complex. Kids can't just get a job. So in this position, you really need life insurance.

Once the kids have grown up and left home, then your need for life insurance goes way down. In fact, if you have saved money, and have investments, I would argue that you don't need life insurance at all, due to the fact that the loss of your income will not be catastrophic.

And the entire line of thinking that "I want to leave the kids something is another myth. You are statistically far better off just putting some cash in a savings account - even at a very low interest rate - that you leave instead.

All of the above cases can be cheaply covered using term life insurance. Yes, the argument goes that locking in whole life insurance rates when you are young is a prudent move. No, it isn't. As you get older, your need for insurance coverage decreases, so there is no need to lock in a lower price on an expensive product that you won't need later. People don't do that with other things, but regularly do it with insurance.

So, when you talk to an insurance salesman, don't go by what they say you need. Think about it, if you ask a car salesman if you need a more expensive car, or a realtor if you need a more expensive house, or a waiter if you need a more expensive meal, what do you think their reply will be?

Figure out the coverage that you need, and find the cheapest way to get it with term life insurance. If your salesman won't listen to you, then run, don't walk to another company.

[lindseyc]

Thanks for the reply Brunt. I actually agree with everything you said. The only reason I have life insurance (it's $10 a month) is because it gives me a $15 discount on my insurance for having multiple policies. I have no dependents nor am I married and the family members who inherit my house/belongings will profit far more than any expenses they will incur getting rid of my body!

When I get my new policies I will only get life if it gives me a suitable discount. I actually already have life insurance as part of non-optional work benefits so I am over insured as is, considering I have no family of my own.

[Ciel]

You may wish to explore some financial planning options for the assets you intend to pass onto family. What I learned this month (at a talk about executors and their roles) is that the taxation on different assets of same value given to family can depend on the context of each person's situation and any capital gains. Most likely, that asset will add to that person's personal taxable income at a higher tax rate if the value is high enough. If the estate/beneficiaries does/do not have enough cash, assets may need to be sold to pay the Ontario Ministry of Finance and the CRA.

[mulock]

Insurance....it just leaves a bad taste in my mouth.