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Shop Around for the Best Rate
by Kimberly Lankford

An insurance agent gave me a quote for a term insurance policy, but, after I actually applied, the price ended up being a few hundred dollars more. He said that I couldn't qualify for that company's best rate because of my cholesterol level. Should I go with the rate they've given me or should I shop around some more?

You should definitely shop around some more. Insurance companies are making it much more difficult to qualify for their best rates, and their second-best rates often cost hundreds of dollars more per year -- often 8% to 25% higher, says Byron Udell, CEO of insurance brokerage AccuQuote. But each company has different criteria to get their lowest prices. So you may qualify for the best rate with another insurer, which could cost you much less than the first company's second-best rate.

For example, a 30-year-old male shopping on insurance marketplace InsWeb could pay as little as $275 per year for a $500,000 policy with a 20-year rate guarantee if his cholesterol HDL ratio is less than 5.0. But if his HDL ratio is 5.0 -- not below it -- the lowest rate he can get at InsWeb is $285 (with this quote coming from a different company than the first). If his HDL is 5.1, the lowest rate he could get would be $330, which is offered by a third company, says Todd Ewing, InsWeb's senior vice president. If he applied only with that first company and his HDL was 5.0 or above, he would have paid at least $345 -- that insurer's second-best rate.

This is why it's important to work with a Web site or broker who deals with several insurance companies. It also helps when you ask for price quotes to know all of your information, including your cholesterol level, HDL, blood pressure, accurate height and weight, and family medical history. Because the insurer will double check this information when conducting a medical exam, you're more likely to get an accurate price quote if you have a good idea of what the insurer will find and share that information up front. Online insurance brokerage Insure.com even shows the company's underwriting criteria with its quotes, explaining exactly what you need to do to qualify for the rate being quoted.