This is a guest post from Micheal Quinn. Michael is the cofounder of Life Insurance Blog and a multi-state licensed life insurance agent. LIB has helped thousands of people understand life insurance and secure affordable coverage.
mong the many financial decisions, purchasing a new life insurance policy is one of the most important ones for many adults.
It acts as a security blanket for your family during your life, as well as after you’re gone. Without sounding too morbid, we’re all going to die and there’s only so much we know about the future. What may happen to us tomorrow is totally unknown.
Irrespective of the length of time we have left on earth, living without life insurance can be a significant determinant, both to the family and you.
However, the challenge of securing the right life insurance policy is something that many people don’t understand are not equipped to face.
A lot of folks end up feeling overwhelmed with the buying process. Many feel like the return on investment was ridiculously low or worse, that they were ripped off.
With all the negative energy surrounding it, it is no wonder that getting life insurance is the last thing on your mind.
But what if we tell you that saving money on life insurance is quite possible and that it is achievable?
What are the benefits of reading this article?
If you read the article from start to end without skipping on any step, then, you'll know the important things like:
Top 7 Ways to Save Money on Life Insurance
Would you be interested in finding out the top seven ways to save money on life insurance? Read on!
1. Do a company research
Similar to any other service or a product, there are countless companies that offer life insurance policies.
You will be surprised at how much information about prices and plans you can gather by prodding around a little on the internet.
Visiting insurance blogs, companies’ websites and their social media platforms are a good place to start.
If you are absolutely clueless about making comparisons, make use of the quoting services available online.
To get the most accurate quotes, be as specific as you can with your health information, including the family’s health history, and health problems that you might think are unnecessary.
The quote you get after disclosing all your information is the baseline premium you will refer to while shopping.
An alternative way to determine your premium would be to ask an agent if you have one. However, if you don’t have an agent in the first place, make sure you seek out an independent agent.
Independent agents don’t work for a specific company. They have access to multiple companies so they’re able to provide you unbiased recommendations.
With a rough idea about the premium costs you may pay, you are empowered to ask the right questions and ultimately make the right decision. Most importantly, you will not be taken for a ride by any agent or company.
2. Choose only licensed companies
There are thousands of companies that sell life insurance. The sheer number can be confusing, and their apparently attractive offers are no help either.
You may not qualify for what you think you’re applying for and this can lead to frustration. Irrespective of the offers, if a company is not licensed by your State’s Insurance Department to operate, you are putting your money and yourself at risk.
The advantage of buying life insurance from licensed companies works in two ways. One, the State Insurance Department has your back in case of any issue you might have with the company.
Two, in the unfortunate event the company enters bankruptcy; it will be supported by the state’s life insurance guaranty fund. Contact the department office in your state for more details.
3. Buy the insurance early
Premiums for older people are going to be more expensive than for those who are younger. And no, it is not because older folks have more money. Age is a risk factor.
The reason…the older you are, the closer you are to passing away.
Another benefit of buying life insurance early on is that you can renew the term coverage without having to repeat the medical exam.
Some companies also offer “level premium” policies, which allow the buyers to pay the same premium for up to 20 or 30 years. You can then renew the policy with a permanent plan if you need coverage beyond the 20 or 30 years.
4. Take an exam
You can also save some money if you take the insurance medical examination.
This will provide the underwriter a birds-eye view of your overall health and notify them of any risky conditions. Taking the medical exam is much more pocket-friendly than a non-medical exam policy.
Your premiums are based on your risk and health. Individuals who have a clear medical report are going to pay much less than those who aren’t.
5. Consider which plans suit your needs
Each company will lure you with fancy plans and offers. It is their job.
But do not be swayed easily. Just as they did their job to show you all their plans and prices, it is your job to decide which plan works for your family and your lifestyle.
Take in all their recommendations and match the best policy for your goals.
Nailing that perfect insurance plan is something even the experts struggle with, so don’t get overwhelmed.
With such a volatile economy and rising costs of living, predicting the cost of your children’s education or how your lifestyle will change when you start a new family is quite impossible. If you have a mortgage on a home, that is another factor to consider.
However, it is a good idea to evaluate your lifestyle every three years or so. If you have had a life-changing event, analyzing your life at the end of that year is a smart choice.
When you take stock of your needs and also what your family will require in the event of your death, it will be easier to choose the right plan. In the event that you need additional insurance, such as after the arrival of a new child, consider adding a rider.
For the uninitiated, adding a rider is a provision in life insurance that adds benefits to the existing insurance policy.
However, the terms and conditions regarding whether to pay extra for a rider or not differs from one company to the next. Therefore, have a thorough consultation before you complete the transaction.
Understanding what your family needs and choosing to add a rider instead of purchasing a whole new insurance policy can save you a lot of money in the long run.
If you work in a company and your employer has an insurance program in place, consider checking it out. Corporate sectors often enjoy subsidized insurance policies as they participate as a group.
An added advantage of group insurance is that you may even have savings options, but this is dependent on factors such as your age and your health condition. Just know that group life insurance may cost you more depending on your situation.
If you’re in great health, then an individual policy will cost less. However, if you’re unhealthy or uninsurable — a group policy can provide excellent value.
6. Improve your health
Although it sounds unfair, the overall condition of your health has quite the financial effect on your life insurance.
It is no secret that the worse your health is, the more expensive your life insurance plans are.
If you have a medical condition or a hereditary problem from your parents, there is nothing much you can do except follow the doctor’s orders. However, if you practice unhealthy lifestyles such as smoking, regularly eating food that increases your weight, and abusing your body, there ways to improve your health — and cost of life insurance. Smoking alone is a huge determinant in the cost of your premiums.
A good place to start is to stop smoking, make a certain lifestyle change, eat healthily, and improve the overall condition of your health.
Why should I bother when I have already paid the premium for my insurance, you might ask? The reason is, you can ask for a reevaluation of the premium if your health improves after you bought the insurance!
Of course, you have to undergo the medical exam to establish a definite proof for your new and improved health.
But considering that smoking has been shown to have up to 342% on the increase in premium rates, imagine the amount of money you will be saving in the long term.
So you see, insurance companies are not all about taking your money. They reward you for taking care of your health. Is there anything for you to lose?
7. Choose to pay your insurance bills annually
At a casual glance, paying the insurance bills on a monthly basis seems less burdensome and feasible. However, when you do the math, paying monthly can add up to a significant increase in the overall cost.
Most insurance companies do not hide the fact that extra charges are included in a month-to-month plan.
Paying your insurance bills on an annual basis is much cheaper in the long term.
Some companies also charge a lesser amount when you transact the premiums from your checking account. However, this varies across different companies, so it pays to check with them before making the payments.
Additional tips to save money on life insurance.
- Term policies are better choices than permanent policies.
- Policies that have fractional premiums can turn out to be very expensive.
- If a life insurance policy does not require you to take a medical exam, it is usually more expensive.
- Always get a second opinion before you buy life insurance and compare rates from multiple companies with an independent agent.
Save Money On Life Insurance: Conclusion
It is not uncommon for many people to regret buying life insurance policies. They either cannot keep up with the extra premiums and costs, the premium renewals, or run into problems by neglecting their health.
However, if you are aware of the dynamics of saving money on life insurance, there is no reason for you not to benefit from life insurance.
Feel free to add our top tips to make your life insurance decision easy and effortless like a pro.