Should I Bundle Life Insurance With Auto and Homeowners Insurance?

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Your bills and finances can get out of control quickly.

You can find yourself drowning in logins and passwords if you chase new credit card bonuses, the best high-yield savings accounts and different insurance providers for each policy.

Sometimes you may want to simplify and reduce the number of accounts you have or bundle insurance policies. In addition to simplicity, bundling insurance can give you a discount. When does it make sense? And are there any pitfalls to avoid when considering that strategy?

Is It a Good Idea To Bundle Life Insurance With Auto and Homeowners Insurance?

I want to buy term life insurance. Is it smart to bundle life insurance with auto and home insurance?

That’s what a listener recently asked Clark Howard.

Asked Julie in Colorado: “My husband is 56 years old. We have two kids ages 12 and 14. We are looking for life insurance.

“We’re wondering if it’s a bad idea to have life insurance bundled together with all the others (car, house) with the same company or is it better to keep it separate?”

State Farm, USAA and Amica are three big insurance providers that sell auto, home and life insurance. If Julie already does business with one of those companies, adding life insurance may be an “easy button” choice. But it also may not be the cheapest.

“What I’d like for you to do is get a quote on level-term insurance from the insurer that provides your home and auto insurance,” Clark says. “And then get other quotes from one of the quotation services that we have a guide to.”

You may also consider getting quotes from some of the best term life insurance companies.

Buying Term Life Insurance Deep Into Your 50s

Some term life insurance policies don’t require a traditional medical exam. However, past age 45, that’s harder to find. And if you do find it, you’re going to pay a premium for that convenience.

“At 56, you’re going to be disappointed at what level-term insurance costs,” Clark says. “Because it’s all actuarially based. And so you may find that you want to buy a policy that is meaningfully shorter than what I’d usually recommend. And it would cover the rest of your working lifetime.

“Maybe a 15-year policy that would cover until age 71. The kids would be at that point 27 and 29 years old. And that would cover the lion’s share of your remaining working lifetime and would get the kids out of – they’re not emerging adults anymore, late 20s. Into adulthood at that point.

“It’ll all depend on health what those premiums will be for that level term but it’s why it’s so important to shop around at any age but especially in your 50s and not just get a single quote from your existing insurer for auto and home.”

Final Thoughts

Insurance policies are as expensive as ever. And the gap between one company and another is increasing fast. Almost every major insurance provider has suffered in recent years. But the degree of suffering — and the level of desperation to increase revenue — depends on the company.

Even if you can get a discount for bundling life insurance with home and auto, you want to get the full picture. Don’t let that prevent you from comparison shopping. Remember, the overall amount of money you’re putting toward insurance each month may or may not be lower by bundling vs. choosing separate companies for each policy type.

This post was last modified on April 10, 2024 9:35 am

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