Reduce your Life Insurance Rate by Paying Premium Annually vs. Monthly
Reduce your Life Insurance Rate by Paying Premium Annually vs
. Monthly
Looking out for ways to reduce your life insurance rates? Most people know that the following tips can help to reduce your life insurance premiums:
Keeping healthy by eating a balanced diet and engaging in regular exercise.
Purchasing a life insurance policy early on in life. The younger you are the lesser the premiums.
Don't smoke or quit smoking.
Accurately calculate the amount of coverage you need. Don't purchase less or more coverage than you have to. Review your insurance coverage at every major stage in life.
Shop around for the best life insurance policya reputable online insurance quote provider can provide you with instantaneous quotes for a comparative study.
Another way you can save on premium payments is by making annual payments. Most life insurance companies offer several payment options. You can pay monthly, annually or even quarterly or semi-annually. However, life insurance consumers may not know that by paying your premiums, other than annually, you may incur interest or what may be termed as penalty fees This interest is called the Annual Percentage Rate or APR. The APR varies from company to company. The consumer protection legislation and rules do not require companies to disclose their APR but there are general rules that you can apply to ascertain whether it is worth paying monthly premiums against annual premiums. Some online insurance quote providers offer a quick and easy way to do this is by using an APR calculator to derive at these figures.
So, one easy way to save on life insurance is to pay premiums annually. If you can afford this, it is definitely worth the savings. With some life insurance carriers, paying your life insurance premiums annually can save you up to 20 percent. By paying annually, you can actually reduce the premium. For instance, if your annual premium payment is $2000.00, your monthly premium may work out to $180.00. By paying your premiums annually, you save $160.00.
Why do life insurance carriers charge extra for monthly payments? Life insurance is a pre-paid policy. This means that the premium amount you pay now is for the next year. A part of the premium you pay is invested to offset future claim payments. For example, if you pay $2000.00 upfront the life insurance carrier can invest this amount to accrue a conservative interest on this amount. However, if payment is made bi-annually, then the carrier can only invest half the amount and generate only half the interest. This difference is reflected in the APR. The smaller the installment period, the higher the APR. Monthly premium payments attract the highest APR.
If you are looking for a great life insurance policy, or wanting to switch policies for more benefits, make sure you compare quotes from several reputable insurance carriers before making a decision. Online life insurance quote providers can help you do this. The more quotes you compare, the more informed your decision will be and the more successful you will be at getting the best deal on your life insurance policy.
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Reduce your Life Insurance Rate by Paying Premium Annually vs. Monthly