Life insurance provides your family and dependents with a financial payout in the event of your death, but how do you make the policy premiums affordable while you're alive? These 15 tips can help lower the cost while giving you assurance that your family won't struggle to pay the bills without you.
There are two types of life insurance policies. Term life insurance covers you for a specific term, say 10 or 20 years, and then expires (but usually can be renewed). Whole life policies remain in force for as long as you pay the premiums, with part set aside to grow as "cash value" that can be withdrawn or used to pay premiums later on. Whole life policies are much more expensive than term policies, but the premiums don't increase over time as do most term premiums. Many people opt for term life insurance, in part because they're cheaper, but also because they only want coverage for a specific time period -- while raising a family, say.
Take a Medical Exam.
Depending on the policy you apply for, you may need to undergo a medical exam. The higher the coverage amount sought the more thorough the exam will be; some life insurance plans with low coverage only require applicants to submit a written questionnaire. Never lie during the exam because doing so could void the policy, but prepping beforehand could affect the size of the premium in your favor.
If you don't have any dependents or outstanding loans (including any you co-signed), you likely don't need a life insurance policy. If your circumstances change, however, it probably makes sense to buy one sooner rather than later. Signing up for life insurance when you're young and healthy can help you lock in lower rates. Some policy premiums rise every year while others remain flat for a set term. Either way, you're better off getting into a policy early.
Get Rid of Riders.
Like many insurance products, life insurance policies offer add-ons called riders. For example, you can pay a little extra and receive a portion of the death benefit when you're still alive if you're diagnosed with a serious medical condition or need long-term care. (If you don't have an early-payout rider, be sure you can cover some short-term expenses with an emergency fund and find out if your employer provides disability insurance.) Eliminating riders will keep the overall premium cost down.
Shop for the Best Rate.
Just as you comparison shop before making a major purchase, always compare insurance companies to determine which will give you the best rate for the coverage. It's also wise to reassess your choice every few years. Changes in your health and/or lifestyle, or even the life expectancy of the general population, influence the cost of life insurance.
You may have access to life insurance through an employer, AARP, or another large organization. It's possible that the plans are a good option in terms of cost and coverage, but it still pays to comparison shop.
Drive Safely.
The National Safety Council says the odds of dying in a motor vehicle crash are 1 in 112, the fourth most likely cause on the council's list. Insurance companies know this, and unsafe drivers pay higher premiums.
Stop Smoking.
Premiums for smokers are much higher than they are for nonsmokers, in some cases more than five times higher. That certainly says something about the harmful effect of cigarettes and could be motivation to quit. At least consider making a switch to e-cigarettes -- some insurance companies will give you the nonsmoker's rate if you do.
Lose Weight.
According to the Centers for Disease Control and Prevention, more than one-third of American adults are obese. Like cigarette use, obesity can lead to many health complications and premature death. Among the many benefits of losing weight, you'll qualify for lower life insurance premiums. In other words, slim down before applying for a policy or getting a medical exam.
Choose Between More and Less Coverage.
The amount of coverage you want will affect the premium rate. Opting for a higher coverage amount will be more expensive, but the cost per thousand dollars of coverage decreases as the coverage increases. In other words, you get more for (relatively) less when you buy more coverage. Ultimately, the decision is a personal choice reflecting the needs of your dependents and what you can afford.
There are two types of life insurance policies. Term life insurance covers you for a specific term, say 10 or 20 years, and then expires (but usually can be renewed). Whole life policies remain in force for as long as you pay the premiums, with part set aside to grow as "cash value" that can be withdrawn or used to pay premiums later on. Whole life policies are much more expensive than term policies, but the premiums don't increase over time as do most term premiums. Many people opt for term life insurance, in part because they're cheaper, but also because they only want coverage for a specific time period -- while raising a family, say.
Take a Medical Exam.
Depending on the policy you apply for, you may need to undergo a medical exam. The higher the coverage amount sought the more thorough the exam will be; some life insurance plans with low coverage only require applicants to submit a written questionnaire. Never lie during the exam because doing so could void the policy, but prepping beforehand could affect the size of the premium in your favor.
If you don't have any dependents or outstanding loans (including any you co-signed), you likely don't need a life insurance policy. If your circumstances change, however, it probably makes sense to buy one sooner rather than later. Signing up for life insurance when you're young and healthy can help you lock in lower rates. Some policy premiums rise every year while others remain flat for a set term. Either way, you're better off getting into a policy early.
Get Rid of Riders.
Like many insurance products, life insurance policies offer add-ons called riders. For example, you can pay a little extra and receive a portion of the death benefit when you're still alive if you're diagnosed with a serious medical condition or need long-term care. (If you don't have an early-payout rider, be sure you can cover some short-term expenses with an emergency fund and find out if your employer provides disability insurance.) Eliminating riders will keep the overall premium cost down.
Shop for the Best Rate.
Just as you comparison shop before making a major purchase, always compare insurance companies to determine which will give you the best rate for the coverage. It's also wise to reassess your choice every few years. Changes in your health and/or lifestyle, or even the life expectancy of the general population, influence the cost of life insurance.
You may have access to life insurance through an employer, AARP, or another large organization. It's possible that the plans are a good option in terms of cost and coverage, but it still pays to comparison shop.
Drive Safely.
The National Safety Council says the odds of dying in a motor vehicle crash are 1 in 112, the fourth most likely cause on the council's list. Insurance companies know this, and unsafe drivers pay higher premiums.
Stop Smoking.
Premiums for smokers are much higher than they are for nonsmokers, in some cases more than five times higher. That certainly says something about the harmful effect of cigarettes and could be motivation to quit. At least consider making a switch to e-cigarettes -- some insurance companies will give you the nonsmoker's rate if you do.
Lose Weight.
According to the Centers for Disease Control and Prevention, more than one-third of American adults are obese. Like cigarette use, obesity can lead to many health complications and premature death. Among the many benefits of losing weight, you'll qualify for lower life insurance premiums. In other words, slim down before applying for a policy or getting a medical exam.
Choose Between More and Less Coverage.
The amount of coverage you want will affect the premium rate. Opting for a higher coverage amount will be more expensive, but the cost per thousand dollars of coverage decreases as the coverage increases. In other words, you get more for (relatively) less when you buy more coverage. Ultimately, the decision is a personal choice reflecting the needs of your dependents and what you can afford.
DRUM Project has been a "DREAM COME TRUE". Case studies presented in this book are Live