Let’s be honest, life insurance is something that virtually everyone needs, but the expense of acquiring the correct coverage does stop many of us from getting one. True, getting life insurance becomes more expensive as you become older or start having health complications. But that doesn’t mean you have to skip it altogether; here are ten tricks to help you save money on life insurance.
Table of Contents
1. Don’t Buy More Than What You Need
The first step in lowering your insurance expenses is determining how much coverage you really need. For most people, the term life insurance, which covers a predetermined amount of years (like 10, 15, or 30 years), works just as well as whole life insurance. A 30-year term insurance should be sufficient to cover the years while you’re paying off your mortgage and your children are growing up. And you save a pretty good amount per month on premiums.
People who are single and do not have any dependents will do fine with a Final Expense Insurance coverage which pays just enough to cover debts and burial expenses. Final Expense Insurance is significantly cheaper when compared to term or whole life insurances and can potentially save you a fortune. Learn more about final expense insurance here.
2. Pay Premiums Annually
Paying your insurance premiums annually at the start of the year can potentially save you up to 8% of the total premium. That is a lot of savings. However, not many of us are willing to pay upfront and may be more interested in investing the money. But consider this: if you have some money saved up for investment, you may find that your savings paying premiums annually is more than the interest you get from a high-value savings account. So always pay your premiums annually to save money.
3. Avoid Guaranteed Life Insurance Policies
Many insurance companies provide guaranteed life insurance plans that promise coverage without the need for a medical exam. That may seem handy, especially if you have a history of a medical condition, but this insurance plan will cost you significantly more than a conventional life insurance policy. We know filling out the time-consuming life insurance application is tedious, but undergoing a life insurance medical test will almost certainly result in cheaper premiums.
4. Sooner is Better
There are financial benefits to purchasing life insurance as soon as you have a need for it, whether it’s when you buy your first house or when your first kid is born, or even sooner. You’ll pay less for a policy if you’re younger, and you’ll be able to lock in a favorable rate that could otherwise be out of reach if you develop health concerns later in life.
5. Review Your Monthly Budget
It’s a good idea to check your monthly budget before deciding how much you can afford to put in life insurance. It’s just as crucial to pay your life insurance premiums on time as it is to pay your mortgage or put food on the table. Missing too many installments also increases the likelihood of insurance providers canceling your life insurance plan altogether, which will make it difficult to get a favorable insurance plan in the future.
There are so many options for life insurance that practically anyone can choose a coverage that meets their needs and fits their budget. If the first several plans you look at are too pricey, keep looking until you discover the perfect one for you. Review your life insurance needs and policy when your income rises to see if it’s time to make a change.
6. Group Insurance
If individual life insurance plans are a bit too expensive for you, a nice little trick can be to involve your company and start looking into group insurance. Since companies have a greater incentive, they often offer more competitive rates when it comes to Group Insurance than you would get normally.
Depending on your plan, your employer may pay a portion or all of your life insurance premium on your behalf. Many businesses will pay for your premiums through payroll deductions, so you will hardly notice the cost.
A group life insurance policy via employment does not need a medical exam, making it an excellent alternative for persons with medical issues that might exclude them from other insurance policies. One downside, though when you switch jobs or retire, the insurance coverage may no longer be valid, and getting life insurance after you have retired may be challenging to find and also quite a bit expensive. If you are in such a situation, Final Expense Insurance can be a great alternative.
7. Health is Wealth
In most circumstances, maintaining a healthy lifestyle will result in the lowest life insurance premiums. Although you may not be able to modify certain inherited or physical issues like heart diseases or diabetics, you may still find ways to improve your health.
Maintaining a healthy diet keeping your weight in check through regular exercise all contribute to keeping you in good shape. Also, keep a close eye on your blood pressure, glucose, and cholesterol levels as they too can cause health issues in the long run. Quitting smoking is suitable for your general health and may help you save money on your life insurance costs as well. It’s also a good idea to minimize your alcohol consumption, as it can lead to heart disease and other health problems.
We know staying healthy may seem like a daunting task, but if you follow the process, you will save a ton of money on medical expenses and, as an added bonus, save money on your life insurance premium as well.
8. Shop Around
Insurance, in general, is a significant life investment as you have to pay the premiums for many years to come. So instead of rushing into it, the smartest move is to search around for the most incredible deals. Life insurance is a very competitive market, and once you sign up with a particular company, you are likely to stay with them for a long time; therefore, it may not be a bad idea to shop around and find the best deals.
Compare the average premiums of each insurance package and see which offers the best value for money. The cheapest offer may not always provide the greatest value so try to land a balance between affordability and features when you make your choices.
There are online tools that specialize in comparing offerings between different companies, and it may be a good idea to check them out as well.
9. Life Insurance is Negotiable
While we are on the topic of finding the right balance between quality and affordability, it is essential to understand that insurance premiums are negotiable. If you find a plan that fits your needs perfectly, there is no harm in reaching out to the insurance provider and seeing if you can negotiate more reasonable terms. Even if you can save a few hundred dollars each year, over the course of 30 years, you would have saved thousands of dollars only because you asked. Even if you are turned down, there is no reason why you should not ask.
10. Your Credit Score Matters
When applying for life insurance, your financial ability also plays a role in determining your insurance premium. The easiest way for companies to know about your financial condition is through your credit score. Past bankruptcies, late payments, and a huge amount of mismanaged debt can all result in you paying a higher premium than someone who keeps their finances under control.
So, before applying for life insurance coverage, it may be worth checking your credit score and seeing if you can improve your score as a difference of a few points can save you a fortune in the long run. Here is a comprehensive article on how to improve your credit score.
Bottom Line
Life is unpredictable and having life insurance is essential as it gives you the freedom and peace of mind to plan your finances even after you are gone. But that does not mean you have to pay a hefty monthly premium. Even following some of the tricks mentioned will save you a fortune in the long run. For more valuable tips and tricks on insurance, make sure to read our daily blogs.
