How to Save Money on Life Insurance
Saving money is important for everyone, and this also applies to life insurance.
Many people are of the opinion that most life insurance companies will charge just about the same for a policy, but this isn’t the case.
There is an abundance of ways you can save money when buying life insurance.
Even a few dollars of savings per month can translate into hundreds of dollars or more over the life of the policy.
Keep in mind that most life insurance policies will be in effect for between 20, 30 years and more.
How to Save Money on Life Insurance
We are going to show you a variety of methods on how to save a bundle of money when it comes to buying life insurance.
Choose Term Life Insurance over Permanent Life Insurance
Term life insurance is much more affordable than permanent life insurance. The reason is because term is the most basic form of life insurance as it pays out death benefits only.
This type of policy is suitable for most people and can handle most of your life insurance requirements. Those with more complex estates or who want a guaranteed savings plan can take advantage of the cash accumulation feature offered by permanent policies such as through Indexed Universal Life, Universal Life or Whole Life.
Pay your Premiums Annually
You will save money simply by paying your premium annually or once a year as opposed to paying your premiums monthly. Many companies charge a fee for a monthly billing which is added onto the premium you were accessed.
If you don’t think you can manage your payment in this manner you will still save money even if you pay your premium on a quarterly or semi-annual basis.
Ask for a Renewal Guarantee on Term Policies
A renewal guarantee allows you to renew your term life insurance without having to take a medical exam. You may have been healthy when you first bought the policy but your health may have declined over time.
A renewal guarantee allows you to buy a policy based solely on your current age and does not take into account any decline in your health.
Buy Insurance When you are Younger
Life insurance is much cheaper at a younger age. The cost begins to significantly increase with each year starting at age 30 and particularly beyond age 35. The reason is because younger people are likely to be much healthier which makes life insurance that much more affordable. If your health has declined you will be assessed an even higher premium or face the risk of being denied coverage.
Insurance Age Versus Actual Age
Many people don’t know that life insurers will take one of two approaches in determining how much they assess you.
The first is your actual age which is your real age, but there are many insurers that will assess you as an insurance age instead which can end up costing you much more.
What does insurance age mean?
It means which age are you closer to in terms of time. If you are 45 years and 5 months old, you will be charged rates for a 45 year old. But, if you are 45 years and 7 months old, you are considered as being closer to age 46 and will be charged the rates that a 46 year old would pay.
Since life insurance does become progressively more expensive as you get older, this could end up costing you a lot more money over the life of the policy.
Make sure you ask your agent if you will be assessed for your actual age as opposed to the insurance age.
Buy a Term Policy with a Conversion Feature
You will find that many term life insurance policies have a conversion feature which allows you to convert your term policy into a permanent life insurance policy. This can be important especially if your health declines and you want to renew your term policy when it is about to expire.
If you try to renew your policy you will be assessed not only on your age but also on current health status. A significant decline in your health could even cause you to be declined altogether or be assessed with an unaffordable premium.
A conversion feature allows you to convert your term policy into a permanent policy without having to take a medical exam and is based solely on your current age. However, most policies require that you do so by or before a specific time in the life of your term policy so keep that in mind as you will not be allowed to do so after.
Choose an Annuity over a Lump Sum Death Benefit
Many people assume death benefits are only paid as a lump sum which is what most companies advertise. However, many companies also allow you to take the death benefits as an annuity which means that your beneficiaries can receive the life insurance proceeds monthly or as a set payment every few years or so. Your premium is reduced when you opt to take the payable death benefits as an annuity.
Consider your Death Benefits Carefully
You might think you should only buy what you need but be careful in the amount you choose. Most companies have what is known in the business as “milestone discounts.” This is because most insurers are very competitive for specific amounts of life insurance such as $250,000, $500,000 and other set amounts.
You might think that you only need $450,000 in coverage but it can actually be cheaper by opting for the milestone discount of $500,000 instead.
Don’t Buy Guarantee Issue No-Medical Exam Policies if you are Healthy
Although you might be tempted to buy a no-medical exam policy, don’t be fooled by the hype. You see these policies being advertised everywhere these days, but they are actually more expensive than standard term life insurance policies.
Although it is more convenient to buy a policy which doesn’t require a medical exam, the life insurer is taking a much greater risk to insure you. The result is that they charge you a substantial amount more than what you would pay for a term policy which does require a medical exam.
If you are a relatively young and healthy and want to save money then you should avoid these policies. You should only consider a no-medical exam policy if you need a policy right away such as for a business loan, or if you have significant health issues, or if you have a total aversion to needles.
Also, the available death benefit amounts tend to be much lower than those available for term policies which do require a medical exam.
Consider Group Insurance If You Have Health Issues
We don’t recommend this for everyone and is best used in specific situations, but if the company or an association you belong to offers life insurance, then this can be advantageous if you have health issues. These policies cost more than traditional policies. They also have the downside that if you leave your employment or are laid off, you will lose your coverage.
But, if you are healthy and want coverage for a long time, you are better off buying a policy outside of work. If you have health issues it might cost you less to buy through a group policy then buying your life insurance separately. Contact us to compare your options and we offer a group term life insurance policy if you don’t have other options.
Ladder or Stagger your Policies
When figuring your life insurance needs, many people simply select one large amount to cover all their life insurance needs, and for one long period of time or term. But, you don’t have to do this as you can opt for several separate policies instead.
Suppose you think you need a $750,000 term life insurance policy to cover all your needs for a 30 year period. This might include $400,000 for income replacement, $250,000 to cover your mortgage and an additional $100,000 to pay for your children’s college tuition.
Consider layering or staggering your policies. For example, you could buy a $400,000 term policy for 30 years to cover income replacement, a 15 or 20 year “decreasing” term policy to cover your mortgage, and a 10 year policy to cover your children’s college tuition. Overall, the 3 policies bought separately will be cheaper AND you can cancel the latter 2 policies whenever your mortgage is paid and your children graduate.
Improve your Health
Many people have the ability to improve their health in a multitude of ways. This includes quitting smoking, losing weight, improving your eating habits, reducing or eliminating alcohol consumption, and starting an exercise regimen.
Smoking and obesity can increase your blood pressure or hypertension and, along with high cholesterol levels, both conditions greatly increase your chances of suffering from heart disease, increased risk of a heart attack, and Type 2 Diabetes.
There are also many other health risks associated with these health conditions which are taken into account by all life insurers when evaluating you for a policy. These are areas you can personally control. By reducing weight and lowering your blood pressure and cholesterol levels, quitting smoking and reducing alcohol intake, you can save a lot of money in how life insurers rate you.
Ask for a Rate Reduction
You may have been initially somewhat unhealthy such as being overweight or were a smoker when you first bought life insurance. If your policy is still in effect and you have subsequently improved your health such as losing weight, stopped smoking which has reduced your blood pressure and/or cholesterol levels, then consider asking the insurer to re-evaluate you so you can get a better rating and a reduction on your premium.
Consider Specialty Term life Insurance Policies
Sometimes you will need life insurance as a requirement for a loan such as a business loan for example. You might think that you will have to buy a 10 year term to cover a loan which you will have paid off in just a couple of years.
But, there are specialty term policies available that will cover these situations such as a “1 year renewable term” or a 5 year term policy for example.
Always Use an Independent Agent
Many people think that all life insurance agents are the same. This isn’t exactly true because there are 2 types of life insurance agents which include “captive agents” and “independent agents.”
A captive agent only sells life insurance for a single company and cannot use competitor companies so you are stuck with what their company offers and the premium you are assessed.
An independent agent has access to dozens of companies and can perform the comparison shopping for you. They can find companies which not only offer the most affordable premiums, they can find companies which are lenient and liberal when it comes to accessing you for a variety of health issues and still find you a more affordable premium.
If you need special considerations for a more tailor-made policy, an independent agent can help there as well. They can also provide you with valuable advice and find you the most affordable policies and find the best insurer for you if you are looking for permanent life insurance.
Who Do I Call to Save Money on My Life Insurance?
Contact the independent agents here at Abrams Insurance Solutions because we can research the companies and perform the comparison shopping for you.
We can provide you with quotes from the most reputable companies and offer valuable advice on your life insurance needs or answer any questions you have about life insurance.
We also have access to over 70 life insurers and know which companies have the most affordable life insurance policies for any need.
Call us right now if you have questions, need some advice, or want to start your application right now at 888 – 905 – 0333 so you can get the life insurance policy you need today!