Buying life insurance is not an enjoyable purchase. No one likes to think of their own mortality. However, life insurance is almost always necessary in our overall risk management strategy. The good thing is, life insurance doesn't have to break the bank. There are a number of things you can do to keep life insurance premiums down. Let's look at 6.
1) Buy term
Term life insurance vs whole life or universal life is a popular debate when determining what is most beneficial for individuals. Term is certainly cheapest, and here at Summit we prefer it for many of our clients. Whole life has a cash savings built into it, but typically we look to term to keep costs down and keep our savings / investing goals separate from the goal with life insurance — which is to manage risk. That said, there are some situations when whole life or universal life is best for the client (even if it is not the cheapest option) in which case we recommend it. It is important to talk to a professional to see how life insurance fits within your overall financial planning and risk management strategy to better understand what type of life insurance is best for you.
2) Shop around (independent)
Life insurance companies are not all created equal. What might be the best rates for your spouse, could very well not be the best rates for you. Insurance companies have demographics they target, or various unique risk factors they might prioritize. Because of this, you want to check around. The simplest, quickest way to do this is to go to an independent insurance agent. Ask them what companies they have the ability to check rates on and which ones they might not have the ability to check. If there are companies they are not licensed with, you might check those companies separately.
3) Be in good health
This goes without saying, but the healthier you are, the less risk you pose to the insurance company and the more willing they are to not only insure you, but to do it at a lower rate. Being in good health comes from eating right and exercising regularly. Even practicing meditation, yoga or breathing exercises to manage stress can lead to better physical and mental health.
4) Be within a healthy weight range
Insurance companies typically offer better rates for individuals who’s BMI falls within the 18-25 range. Being over that (or under) presents a higher risk for insurance companies as being overweight presents more health concerns.
5) Pay annually
Paying annually instead of monthly can often save you money. One thing that can help is to have a separate bank account for expenses like this. Have your paycheck automatically deposit a certain dollar amount into that account to pay for things like your annual life insurance or home or auto insurance premiums, or property taxes, things like that. That way you aren’t hit with a large unexpected expense when you are not expecting or planning on it.
6) Take the plan with medical exams
People hate the thought of having to take a medical exam when signing up for life insurance. So much so, that when given the option, they will often take the plan that doesn’t require a physical. Keep in mind, if the insurance company doesn’t require people to take the medical exam, they are taking on riskier policy-holders by default and they have to make up for the higher rate of claims by charging a higher premium to their policy holders. In other words, if you are in good health, opt for the plan that requires a physical, it should save you money.
There you have it, 6 ways to save money on your life insurance!