Q: "Hello, I have familiarized myself with the fundamentals of life insurance and understand it’s basic workings, however I would like to know more about the pitfalls and details that I may overlook as a result of my small experience in dealing with insurers. Thank you."

A: Few ways to Save on Life Insurance

THE PRICE YOU pay for life insurance will depend on your age, your health and your habits. That is to say, forget about a really cheap policy if you: smoke, have existing health problems or enjoy skydiving. Still, there's plenty you can do to save on your premium and avoid some common pitfalls. Here are some suggestions

• If you get some life insurance as a job benefit, that's fine. But that should never be your only coverage. You can't count on keeping it if you lose your job or become disabled and can no longer work. There's no federal law that obligates your old employer to allow you to keep the coverage, even if you continue to pay for it. So it's a good idea to use any life insurance you get from work as a supplement to what you buy on your own. If your company allows you to buy additional insurance, be sure to compare the rates on coverage you can buy from your employer; more often than not, you can find a better deal on your own, although you'll have to qualify medically to get a policy on the open market.
  
  
• Sometimes larger insurance costs less, especially as you approach multiples of $250,000. So, if for example, you are a 47-year-old, non-smoking male. A purchase of $225,000 coverage, will require payments of $424.00 per year. However, the same insurance with a coverage of $250,000 will cost you $400.00 per year.
  
  
• Avoid Hidden Fees. Convenient monthly payments, automatically deducted from your checking account are an easy way to pay your life insurance premium. But before you sign up, know the fact that many insurers charge some life policyholders fees of 10% to 14% of the annual premium simply for the privilege of making monthly payments. Charges like these are often built into the payments, so you may not even know about these hidden charges.
  
  
• You may know that you can cut your insurance premium if you stop smoking and lose weight, but you may not know just how much you can save. Well, how does 50% sound? That's right, most insurance companies charge twice as much to insure a smoker. The rewards for getting back down to the right weight for your height can be just as great. Moreover, some insurance companies practice the full or partial return of the difference in paid premiums between a smoker and a non-smoker, in the case that you quit smoking in 2-3 years after signing your contract.
  
  
• Insurance companies have come up with a wide range of extras (riders) to increase your life insurance bill, most of which are not worth your money. Consider the accidental-death rider, more commonly called double indemnity. For about $1 or $2 per $1,000 of coverage, an insurance company promises to pay your survivors double the face amount of a policy if you die in an accident.

But it's foolish to speculate on the manner of the cause of your passing away, especially since accidental death is relatively rare. The "waiver of premium" rider is another in a series of tricks for the insurer to win some money on your contract. Under this rider, which can cost as much as 110% of your annual premium, your insurer will continue your coverage in case you're disabled. But you should already have enough disability insurance to cover living expenses. If you do, you don't need a waiver of premium. Finally, some companies offer spousal or dependent riders that add a term-insurance element to your whole life policy that will cover your spouse or your children. Chances are, if your spouse needs term insurance, you can find a cheaper policy that is a separate entity. And unless your child is the bread-winner of the family, he or she doesn't need insurance.

• The client has to be sure of what he/she is buying. In their sales presentations, agents like to stress the tax-free accumulation of cash value in a whole life policy but what they fail to mention is the down side: High commissions, seemingly endless payments before any sizable cash value is accumulated and tremendous penalties in case one decides to get out of their contract early.

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