Life Insurance can help your family pay bills and achieve their goals if you die and your income stops at some point in the future. However, premiums might vary greatly depending on your age, health, insurance company, and policy choice. A few basic tactics can help you save hundreds of dollars every year while still providing the coverage you require. Here are ten suggestions for saving money on life insurance.
Understand Your Needs
Before diving into the world of life insurance, take the time to evaluate your needs. Consider factors such as your financial obligations, dependents, and long-term goals. Understanding your specific requirements will help you choose the right type and amount of coverage. By not over-insuring yourself, you can save significantly on premiums.
Buy When You’re Young
Your age at the time you purchase a policy constitutes one of the major determinants for life insurance premiums. The rates decrease as you get younger. For instance, the typical annual premium for a non-smoking guy in good shape on a $500,000 20-year term coverage is:
- $406 if he buys the coverage at age 30
- $622 if he buys it at age 40
- $1,461 if he buys the coverage at age 50
When you purchase when you are young, you can lock in inexpensive premiums for the policy’s term, which can range from 20 or 30 years, or for your entire life for some forms of long-term insurance. As you age, you’re also more likely to experience health issues that could increase your premiums or make it challenging to receive coverage.
Buy Term Insurance
Almost everyone who is an insurance advisor will caution you to avoid any policy that promises to create a cash value. Instead of tying away your money in a life insurance policy with pricey per-year investment fees, budgeting fees, and escalating insurance costs, take Suze Orman’s, Dave Ramsey’s, Bob Brinker’s, and others’ advise and “buy short and invest the rest of the money.”
You don’t have to worry about the financial health of your investments or if they’ll keep up with the escalating cost of your policy without term life insurance. The truth is that general life insurance policies seldom perform well, which is why they have become a point of contention in recent years, particularly as retirees continue to lose coverage due to poor financial performance.
Instead of paying 2-3 times more per month for the same level of coverage, we advocate conserving your money and seeking for a secured rate. You can also purchase a surety bond or universality life insurance policy if you are concerned regarding outliving your coverage. These policies provide level coverage and prices until the age of 90 or later without requiring you to invest.
Insure the Right Amount
It is crucial to understand that the more you expect an insurer to be paid for your life insurance, the higher the cost of your coverage are going to be. If you and your family could live adequately on $200,000, don’t buy a policy worth $400,000.
Assess Your Coverage Needs
To save money on life insurance, it’s crucial to evaluate your coverage needs accurately. Determine how much financial protection your family would require in the event of your passing. Overestimating your coverage needs can lead to higher premiums. Consider factors such as your outstanding debts, mortgage, children’s education expenses, and your family’s daily living costs. A precise assessment ensures you purchase only the necessary coverage, avoiding unnecessary expenses.
Make Annual Payments
Life insurance companies, like other businesses, desire to be paid in advance. Most insurers give a 4-8% discount to end-users who cover their monthly premium payments a year in early. This saves them the trouble of charging you, and it reduces the likelihood of them forgetting to make a payment.
If you opt to move to annual payments, you may immediately adjust your payment regularity to monthly, quarterly, or semi-annually if cash flow is an issue. It’s also worth noting that most companies will give you a prorated refund if you decide to discontinue your policy later.
Maintain Good Health
Your health plays a significant role in determining your life insurance premiums. Insurers assess your risk based on your health history, current health status, and lifestyle factors. Maintaining good health through regular exercise, a balanced diet, and regular check-ups can result in lower premiums.
If you have certain health conditions, work on managing them effectively. For some, quitting smoking or losing weight may lead to substantial premium reductions. A healthier lifestyle not only saves you money on life insurance but also improves your overall well-being.
Over-insuring occurs when you purchase more coverage than you actually need. While it’s essential to provide financial protection for your loved ones, excessively high coverage can result in inflated premiums. Carefully consider your family’s financial needs and select coverage that adequately addresses those needs without going overboard. Avoiding over-insurance can help you save money while still providing peace of mind.
Work With an Expert
You may be tempted to purchase life insurance through a friend or relative as a means to help them establish a foothold in the life insurance business. While this is a generous measure, it may not be the best choice if you want to save money. Even using a local agent who only sells home and auto insurance will cost you more in the long run.
As mentioned previously, each company has unique underwriting rules and prices. You will save a lot of time, money, and effort by working with an experienced, independent life insurance agent. A recruiter’s responsibility is to ensure you can apply to a company that fits your lifestyle and health profile.
Rather than applying to the company that appears to have the lowest rates online, your agent should evaluate your health and lifestyle against each company’s standards to ensure you are applying to the right company. This is especially important if you have a history of health problems, as applying to the wrong company could result in your application being rejected.
Shop Around for Quotes
Don’t settle for the first life insurance quote you receive. Different insurers offer varying rates for the same coverage. Take the time to shop around and obtain multiple quotes. Online tools and insurance brokers can help streamline this process.
Comparing quotes allows you to identify the most competitive rates that meet your coverage needs. The savings from choosing the right insurer can be significant over the life of your policy.