How to save money on life insurance

Purchasing the incorrect benefits for a cheap premium does not result in savings.

There are methods to save money on life insurance, but they don’t necessarily include paying a lower premium right away. Look for an insurance that fits your needs first and foremost. Purchasing the incorrect benefits for a cheap premium is a waste of money, not a save. Aside from that, here are some strategies for making the most of your life insurance payments.


Prior to purchasing

Once you’ve decided on the sort of life insurance policy to purchase:


Concentrate on firms that are financially stable.Life insurance is sold by dozens of firms. Choose firms who have received high ratings from two or more independent rating agencies. A low premium from a fragile corporation is a bad investment. SeeFor further information, see How Do I Choose a Life Insurance Company?
Shop around to obtain an idea of the premium you’ll have to pay.Quote services on the Internet may be useful for this, or you may approach an agent or broker for a premium estimate. Determine which rate class you will fall into as part of this inquiry. Most businesses that provide individual life insurance have many pricing classes, which are commonly referred to as “preferred (non-tobacco),” “standard (non-tobacco),” “preferred (tobacco),” and “standard (tobacco).” A limited number of persons have health issues or histories that preclude them from receiving even “standard” rates. Many people in this category will be offered “impaired risk” or “nonstandard” insurance prices.


Consider group insurance.Consider joining in your employer’s life insurance policy, even if you have to make a cash contribution. Employers frequently subsidize group insurance prices, making it less expensive than individual life insurance. Some persons may be able to acquire coverage up to a specific amount without giving proof of good health. You’ll most likely pay premiums through payroll deduction, which might be a convenient option. However, compare group and individual prices, since group insurance may or may not give a savings based for your age and health status. When comparing group versus individual life insurance, keep in mind that if you have more than $50,000 in group life insurance, IRS tables assess how much it costs to provide the excess coverage and charge you taxable income for that cost. Look for yourself.Determine the rate class you’ll be assigned to and, if required, consider making some lifestyle adjustments (such as quitting smoking, maintaining a healthy weight, and exercising frequently) to qualify for a more favorable rate class.

When you’re ready to purchase,


Shop around for the best deal.Life insurance is a highly competitive industry, with variances in yearly rates of hundreds of dollars even among financially sound businesses for essentially the same policy.

Take a look at the net cost index.How can you compare two insurance with premiums that start cheaper than the other but eventually get higher? Or one with low premiums but a high cash value, and the other with greater premiums but a lower cash value? Use a net cost index, which is a typical way for combining various factors into a single value. minor discrepancies should be ignored since the indexes are estimates based on assumptions, and minor differences may not signify genuine variations in values. These index numbers will be provided by the agent or broker with whom you are working, or by the firm from whom you are contemplating purchasing a policy. Consider premium discounts for specific quantities of insurance.Most firms provide rate reductions for specific insurance quantities. Because a discount “kicks in” at the larger insurance level, you may actually pay a lower premium for $250,000 of life insurance than for $200,000, or for $500,000 of life insurance than for $450,000.

“Fractional premiums” should be avoided.You can often pay your life insurance premium once a year, twice a year, once a quarter, or once a month. Although paying quarterly or monthly may appear to be more convenient for your budget, some businesses impose large fees for paying premiums often. Others demand relatively minor fees to do so. If a corporation charges a fee for paying more regularly, try planning so that you only have to pay your premium once or twice a year.

Look for renewal assurances when purchasing a term policy.A renewal guarantee allows you to begin a new term after the current one expires, paying a higher premium based on your current age, but without having to undergo a new health check or provide any other “evidence of insurability.” You’d have to hunt for life insurance all over again if you didn’t have the guarantee, and if your health has deteriorated, you could have to spend considerably more or not receive it at all.