Follow these money-saving tips and you’ll be on track to get the most bang for your buck
A life insurance policy is a great way to prepare for the unexpected. Life insurance can ensure that your beneficiaries are taken care of long after you have passed. But, while you are still alive, you want to be sure you are paying the best rate for your life insurance policy. Luckily, there are plenty of ways to save money on life insurance.
How To Save the Most Money On Life Insurance
From discounts to lifestyle changes, there are plenty of ways to get a more affordable rate for life insurance coverage
The rate you can expect to pay is based on many different factors, like your age, your health, and your lifestyle. With that being said, there are a few different approaches you can take when shopping for life insurance that can save you lots of money in the long run.
1. Shop Around
Nowadays, the internet has made it much easier to shop around for anything, and life insurance is no exception. One of the best ways to save money on life insurance is to shop around for different quotes so you can make sure you’re getting the most for your money.
The internet is a great place to start, but you may also want to work with a broker to help you find the right policy for your needs. No matter if you choose to find quotes online, work with a professional, or both, you should always get quotes from multiple life insurance carriers.
While it may be tempting to go with the lowest premium possible, you should instead find a good balance between your coverage and your premium. This way, you can make sure you have the coverage you need at a price you can afford.
2. Make Healthy Lifestyle Changes
Of all of the factors that life insurance carriers consider, health is among the most important. When applying for life insurance, you will typically be asked about your health history and your family’s health history. Plus, many life insurance companies will require you to undergo a medical exam. It is during this process that a life insurance provider is evaluating your risks and determining how insurable you are.
You may want to consider making some healthy lifestyle changes to get a better rate. A great example of this is smoking. Smokers are considered a much higher risk to life insurance companies, and therefore, almost always pay a higher rate. If you quit smoking, typically for at least a year, you can expect a much lower rate. Among other lifestyle changes, losing weight and lowering things like your cholesterol or blood pressure can help you lock in a lower premium rate.
Now, you may not have the time to wait to make these lifestyle changes, but you could still be worried about how these will affect your life insurance premium if you have to do a medical exam. Luckily, many companies offer life insurance policies without a medical exam. One of the options for a no medical exam life insurance policy is an accelerated term life insurance policy. While not all companies offer an accelerated term life insurance plan, it is becoming more commonplace in the industry. All you do is submit information about your health history, your lifestyle, and your financial history—all while forgoing the medical exam. If approved, the policyholder will get a quickly underwritten policy that will go into effect much faster than a traditional approach.
3. Choose Your Policy Type Wisely
There are many life insurance policy types out there but not all are created (or priced) equally. Generally speaking, a term life insurance policy tends to be the most affordable type of life insurance.
Term life insurance is a basic type of life insurance that covers the beneficiary for an agreed-upon period of time, whether that be 10, 15, 20, or even 30 years, for an agreed-upon amount of coverage. The reason that term life insurance is more affordable in most cases is that the policy eventually does expire without a payout if it hasn’t been used. Plus, the death benefit is the only coverage you get with term life insurance. Though the death benefit is the one and only perk, it’s still a great option for people looking for a life insurance policy with comprehensive coverage for their families. Plus, your life insurance provider may offer a renewable guarantee, which can help you get a new term policy after expiring for a better rate.
Now, term life insurance may be the most affordable type of life insurance, but it isn’t your only option. Many others consider permanent life insurance as an alternative to term life insurance. In comparison to a term policy, permanent life insurance covers the policyholder for their entire life rather than a certain period of time. Of course, this life insurance does have a death benefit payout as well, but it also generates savings called a cash value. As a policyholder continually pays the premium over time, that cash value grows and can be borrowed against or used in the future. These benefits are great if you’re looking for this much coverage, but keep in mind that more comprehensive coverage comes at a cost. Permanent life insurance is generally much more expensive than term life insurance.
4. Buy Only What You Need
Another great way to save some money on life insurance is to only buy the amount of life insurance coverage you need right now. To determine how much coverage you need, consider the following:
- What is your current salary? Experts recommend having a death benefit that is between 20-30 times your annual salary.
- What will your family’s financial situation look like if you were to pass away? Consider how any of your large debts will be paid and how your family will afford to pay things like utility bills and maybe a mortgage payment.
- What do you want to leave behind for your children? If you don’t have some type of inheritance money set aside for your children, but you still want to be sure you can leave behind money for things like college or wedding funds, you may want to consider adding a little bit more coverage.
Should your situation change, you can always buy more coverage later down the road.
5. Get Life Insurance When You’re Young
Age is one of the biggest factors life insurance companies use to determine the price of an insurance policy. Because you are at less of a risk of dying when young, companies offer much lower rates. As you age, you are more likely to develop health issues that life insurance companies use to make your rates higher. Buying when you are young can help lock in a lower rate, making it much more affordable over time.
6. Ask For a Rate Re-evaluation
As discussed earlier, your health is a big factor that plays into determining your premium rate. If you already have a life insurance policy or need to get one when you aren’t in the best of health, keep in mind that your provider may be able to re-evaluate your health for better rates if your health does improve later down the line
Usually, you have to maintain better health for a while before your provider will give you a better rate. You will likely need to provide medical records to prove that your health has improved and your improved health has been maintained. If you are in better health than you were when you got your policy and your provider will not re-evaluate your health, start shopping around for another policy. Another company may give you a better rate or coverage when considering your current, improved health status.
7. Ask Your Carrier About Discounts
Beyond all of these money-saving tips, you can still save even more money by asking your carrier about discounts and other ways to save on life insurance.
In fact, many carriers will give a good discount if you are able to pay for your premium upfront once a year as opposed to monthly. Depending on the company, they may give a discount ranging from 2-8%. Over the course of 30 years, that discount will significantly add up, and you will save so much money in the long run.
Here are a few other ways you can save too:
- Bundling – When you bundle your life insurance with home or auto insurance, you can normally get a better rate for the insurance plans you bundle together.
- Rate discounts – Ask your life insurance provider about company rate discounts for specific coverage amounts. You may pay less for a little more coverage because of a higher rate discount on higher coverage amounts.
- Employment discounts – Companies may provide discounts for people in the military or even teachers.
Life insurance is one of the best coverages you can get to ensure your family will be financially supported in the event of an unexpected death. With that being said, there’s no reason you should be paying more than you need to while you are alive. Hopefully, by following these 7 money-saving tips, you can lock in the lowest possible premium rate for the life insurance coverage you need.