We understand how important it is to you to manage a big purchase like life insurance while making sure you’re getting the best price. After all, if your monthly premium varies even by just a few dollars, that can add up to thousands of dollars over the course of your life.
However, we also understand how difficult it can be to put a value on your loved one’s protection in the event of your sudden death. You want to be sure you find a company that is reliable. With all this to consider, you might already be feeling overwhelmed. Don’t worry. We’re here to help.
These 11 tips will help you find the best coverage at the best rates.
Let’s start with the facts. Here are some questions we’re often asked when we’re helping people find the best life insurance.
What Will Life Insurance Cost Me?
Every life insurance policy is unique to the individual purchasing it. However, we can give you an idea based on your age and sex. Your life insurance cost will depend on the company you purchase it from, the type of policy your buy, and health and risk factors unique to you. These factors may cause your monthly premium to rise or decline. We always recommend you shop around to compare prices.
Let’s say you’re interested in a 20-Year Term Life Insurance Policy with a coverage amount of $500,000.
Your monthly premium as a healthy, non-smoking, non-risk taker (meaning your work and hobbies are unlikely to result in your death), might look something like this:
- 20-year-old male: $32.53
- 50-year-old male: $111.38
- 20-year-old female: $25.79
- 50-year-old female: $86.98
Now, let’s assume you still want a 20-Year Term Life Insurance Policy with the same coverage amount. The only factor we’ll change here is that you’re a smoker. Here’s what you’re looking at:
- 20-year-old male: $106.70
- 50-year-old male: $490.30
- 20-year-old female: $73.20
- 50-year-old female: $334.22
Wow, what a difference! You may find insurers who price their plans lower or higher, but this is generally what you can expect.
That’s why it’s vital that you compare prices and consider all of your policy type options. You may even want to work with agents to help you get quotes.
Now that that’s cleared up, let’s get into the 11 ways you can save money on life insurance.
1. Always Do Your Research!
As if we haven’t stressed it enough already, it’s crucial that you buckle down and look at the numbers. Not only that, you should understand the underwriting process and the different type of life insurance available to you.
Over time, purchasing life insurance becomes a big investment. You don’t want to leave your loved one’s high and dry in the event of your unexpected death. Look at it as you would buying a house or car. These kinds of investments require plenty of research.
2. Be Sure To Bundle
If you already have car insurance, home insurance, or insurance on your motorhome or motorcycle, you may be able to work with your insurance provider to bundle in life insurance.
It’s common practice to bundle policies wherever possible in the insurance industry. The benefit is that you can get discounts on all your policies and have peace of mind knowing they’re all in the same place. Statistics show that you can get a discount in the general range of 5% to 25% for each policy you have in your bundle. This means you not only save money on your auto and homeowners insurance, but your life insurance as well.
3. Minimize Risk Factors
How can you improve your life and lower your life insurance premium at the same time? Simply by living a healthy and safe lifestyle.
Underwriters for life insurance policies take special note of tobacco users and the kinds of hobby activities (and work activities) that could result in your death. If you are healthy, fit, and either free of or in control of chronic illness, you are much more likely to receive a generous rate from life insurance companies.
Let’s take a look at some of the medical factors that can raise your life insurance premium:
- History of cancer
- High blood pressure
- Heart disease
- Anxiety and depression
- Sleep Apnea
Now let’s look at other risk factors that can raise your rates:
- Criminal history
- Family history of cancer, diabetes, heart disease
- Poor driving record
- Drug or alcohol abuse
- Dangerous occupation
- Dangerous sports, like scuba diving and skydiving
- If you frequently travel outside of the U.S.
You may not be able to control every factor listed above, and that’s ok. But remember when you are shopping for life insurance that these factors will be taken into account.
Also keep in mind that if you’re able to lose weight or control your blood sugar levels, that will help you to save money on life insurance.
4. Quit Smoking
Because smoking or using tobacco products can double, triple, or quadruple your life insurance premiums, it’s in your best interest to quit. It’s the fastest way to reduce your life insurance premiums by that much money.
Insurance providers require that you be smoke-free for one year. Check with your insurer to see what they consider smoking. Some insurers only count cigarettes and chewing tobacco, while others include vaping, pipes, and cigars, too.
If you’re already insured and you quit smoking recently, contact your agent and see if they will reclassify you. They may require you to retake your medical exam, but it’s worth the reduction in cost.
5. Rate Consideration
If you’re struggling to meet your premium payment in your current life insurance provider, ask for a rate consideration. Have you lost weight recently? Have you given up any risky hobbies? Switched to a safer job? If you’ve made changes that increased your health and lowered your risk factors, you can ask your current provider to reconsider your rates.
But be aware that they may only allow one opportunity for reconsideration. If you’re coming up on a tobacco-free anniversary, you may want to wait so you stand the best chance of getting lowered rates.
6. Pay Your Premium Once A Year
Many insurance providers offer a discount for an annual payment plan. Plus, you will avoid the monthly fees that your insurance provider may charge for paying monthly. Those fees sure can add up! Lastly, if you opt for automatic draft, you may receive a discount for that as well.
7. Get A Joint Policy
You and your spouse may qualify for a joint policy which will greatly reduce your monthly premium. Joint life insurance policies are paid out on a “first to die” basis. Whichever partner survives will receive the death benefit. After the death claim has been filed, the living spouse will receive the cash and then can purchase a new life insurance policy.
8. Don’t Over Purchase
Be vigilant when purchasing life insurance coverage. Only buy what you need. Your premiums will be higher if your death benefit is high. Make sure you only buy what your family needs.
You can evaluate how much your family needs to get by in the event of your death by calculating your monthly expenses and income. Weigh up the cost of childcare, mortgage payments and education. Also be sure to include the cost of your funeral, burial, and medical bills. This will help you determine how much you need.
While there are still many variables to consider and they are always changing, you should be able to ballpark it. Will your family need $500,000 or will they do just fine with $100,000?
9. Buy A Policy ASAP
Your rates will be lower if you’re younger. It’s that simple. The sooner your purchase life insurance, the lower your rates will be.
In fact, for every year you age, your life insurance premiums will probably increase by between 8% and 10%. Insurance companies make this decision as you get closer to your life expectancy.
Buy soon for the best rate. The best rates are for young adults. Lock it in now to save your wallet any extra stress.
10. Get A Term Life Insurance Policy
Yes, a permanent life insurance policy has its benefits, too. But if you know you only need life insurance until the kids are grown, you’ll save money with a term life insurance policy.
This is especially important for those of you looking to save as much money as possible. The Society of Actuaries claims that permanent life insurance policies can cost ten times as much as level term life insurance plans that offer the same amount of coverage. Your term policy won’t be building cash value, but in the long run, it’s far more affordable.
Permanent life insurance policies are still a good investment. They can be used as investment vehicles as the return rate is annually high. You can borrow against the cash accrued over time or invest that money. You may even find a plan that pays out dividends. Lastly, they can even pay out to future generations. They are simply not the cheapest.
11. Avoid Guaranteed Issue Life Insurance
Guaranteed life insurance policies tend to cost between 10% and 40% more than term life insurance policies.
Guaranteed life insurance policies are beneficial for people wishing to skip the medical exam and avoid traditional medical underwriting. Because your insurance company is taking on the risk of insuring someone whose medical history they don’t know about, the rates are much more expensive.
If you’re terminally ill or in poor health, the additional cost of a guaranteed issue life insurance policy is worth it. In fact, it may be your only option. For everyone else, avoid this type of policy for amazing savings.
Final Thoughts On Saving Money On Life Insurance
We hope we were able to give you cost-saving ideas and strategies for life insurance. After all, you want to use some of your money while you’re alive. Who doesn’t like to save money?
As we mentioned above, life insurance is a huge investment. It’s not just about monthly premiums, it’s about how they add up over the course of your life. You want to make sure you’re making a smart move financially.
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About Sam Goldsmith
With over fifteen years experience in Finance and Insurance, Sam Goldsmith brings a wealth of keen judgment, knowledge and understanding to his profession. As the Principal broker of Goldsmith Insurance Agency, based out of Denver, Colorado, he is responsible for the sales and management of the organization specializing in Life Insurance, Disability Insurance, Annuities, and Pension Planning. Licensed in over 45 states has helped Sam grow his business exponentially. Since starting our website in 2007 Sam has helped placed over 800 policies into force, well over six hundred thousand dollars in annual premium.