Ways To Save On Life Insurance Costs
A tough economy coupled with a maxed out job market has changed the way Americans spend their money
. While the good news is that more and more people are now saving money for a secure future, the not so good news is that they are even scrimping on some essential expenses in the process.
Life insurance is one such essential expense that anyone who has dependants that rely on his income needs to incur. While many people view it as a cake that they pay for, but never get to eat, they fail to see the bigger purpose in getting life insurance.
It provides you the comfort of knowing your family will have the same quality of life even if you are not around to provide for them. Besides, the beneficiaries of the policy or the ones who get to eat the cake are your own the people you care for the most in the entire world.
If you can, at a very low cost, ensure that they remain financially secure even after youve passed on, wouldnt you want to grab that chance with both your hands? Yes, it is possible to save on your life insurance cost by following some simple guidelines.
First thing you can do is consider term life insurance
instead of permanent or whole life insurance. Term life insurance provides coverage for a specific term or period of time, which could be 10, 15, 20 or even 30 years.
Since term life insurance is based on the premise that a lot of policies will lapse without the company having to pay death benefits, its the most affordable type of life insurance. In addition to this, term life insurance does not build any cash value, which makes it possible for many young families to buy it for cheap.
Insurance agents will usually talk up whole life insurance because of its investment component, but you should know the ROI on life insurance products are not as high as other tax-deferred investment vehicles. So, its better to get term life insurance and invest the difference in other investment schemes.
Another way to reduce the cost of life insurance is to buy only as much life insurance
as you need. For that, its important to evaluate how much coverage will be required to ensure your family can maintain the same lifestyle after youre no longer around.
While it may be impossible to precisely calculate your insurance needs as your personal circumstances will keep changing, experts opine that you should revisit your policy every year or at least every time there is a change in your situation. An example of that would be if youve just bought a new home or had a baby recently.
One of the biggest cost-saving factors for any life insurance policy is to buy it when youre young. Premiums are generally low for younger folk in their 20s and 30s. The older you are at the time of buying a life insurance policy, the higher will be your premium rates.
Obesity and health issues also heavily impact the life insurance rates youre offered. If you want to save on your life insurance policy, its important to get into shape. If you have high blood pressure or cholesterol, make an effort to bring it under control and show your insurer some evidence of improvement in your health to get a lower quote. Those who are overweight will be quoted a higher premium and they should exercise and manage their diet to qualify for lower premium rates.
Quit smoking cigarettes and see your premium rates plummet. Using tobacco and nicotine products can have a negative influence on your premium rates and if you stop consuming these products, you can make considerable savings on your life insurance policy.
What you can also do to reduce your life insurance premium rates is limit your alcohol consumption and avoid other unhealthy habits like driving under influence. Not only can an insurance company contest claims for deaths related to alcoholism, but they can also use previous incidences DUI or DWI to increase premiums or deny coverage.
One of the biggest mistakes you can make when buying life insurance policy is not doing enough research. If youve decided to buy a life insurance policy, it pays to shop around and you can easily do it online from the comfort of your home. Look for policies that suit your individual requirements, hunt for best rates, compare quotes from different companies and do a through background check on the insurance companies youve short listed before zeroing in on any one.
Like weve already mentioned, its important to revaluate your policies every once in a while so your coverage is updated to meet your current needs. For example, if your house has been paid for, you can easily do with a lower coverage than before. Same would be the case if your children have already been through college.
Similarly, if there is a drastic improvement in a pre-existing health condition or youve stayed off cigarettes for over a year, you may qualify for lower rates and therefore, should ask your insurance company for a reevaluation.
You can also save on your life insurance cost by making annual payments instead of monthly or weekly installments and by allowing money to be directly debited from your account. This will lower the administrative and operational cost of the insurance company and they may be willing to pass the benefit on to you!
If both you and your spouse are considering life insurance, it may be worth your while to buy a joint term life or first-to-die insurance than two individual policies. This type of policy covers both the spouses and the benefits are paid when either one of the insured dies. Most often, the premiums are lower for such type of policies.
Last, but not the least, be truthful on your insurance application. The greatest injustice you can do to the people you leave behind is providing false information on your application. If your insurance company finds evidence of misrepresentation of truth, it can cancel your policy or worse, withhold paying out death benefits to your beneficiaries when they most need it!
by: Denise Mancini
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