Nearly everyone should have life insurance, because death comes with financial obligations. However, just because you need life insurance doesn't mean you shouldn't try to save on your premiums. Here are a few tips for saving when it comes to your life insurance:
1. Choose Term Life Insurance.
Term life insurance is the most affordable, most widely available type of life insurance, but term life insurance policies require that you get a medical exam to assess your health and level of risk before you can be insured. Other types of life insurance are available without a medical exam, but be prepared to pay higher premiums if you're looking for this type of insurance, as your provider is insuring an unknown risk and will charge for that uncertainty.
2. Get an Exam.
The healthier you are, the lower your life insurance premiums will be, because your insurance company will see you as less of a risk. However, many people choose to purchase guaranteed life insurance policies because they promise no medical exam or questionnaire. Compare the premium differences carefully before you make a decision, but if you're generally healthy, you may decide that having a medical exam or filling out a questionnaire is worth the significant savings you can expect to receive.
3. Joint Policies & Annual Payments Save You More Money.
You and your spouse will likely both need life insurance - and if you do then you should consider a joint policy, which can often save you up to 15% per year on your premiums. Another quick way to save is by paying for your life insurance annually, as your insurance company charges a fee for the convenience of paying monthly. While the administration or financing fee may not seem like a lot on an annual basis, consider the cost of the fee over the term of the policy before you decide to finance your premiums.
4. Don't Over-Insure.
If $100,000 of life insurance is good, isn't $250,000 better? Not necessarily. Your life insurance company bases its premiums on several factors - and one of them is whether you are taking out more insurance than you need. Over-insuring yourself will only result in higher premiums, so assess your family's needs accurately and insure for what you need.
Factors to consider:
- What are your expected funeral costs?
- How much debt are you carrying? How much of it is NOT life insured?
- Do you need to offset your loss of income and if so, for how long?
- Will your family need funds to pay for your child's or children's education?
The general rule of thumb for life insurance coverage is five times your current gross income, but the total amount of life insurance you need can vary depending on the above factors. Since your life and circumstances are constantly changing, review your policy regularly, and adjust it to meet your needs.
5. Don't Stop Comparing.
Many people become complacent with their life insurance policies and hesitate to compare other options to make sure that they have the most appropriate coverage at the best rate. The fact is that while your insurance company may have offered you the best deal when you first bought your policy, they may not be the most affordable as you age. Whenever you need to change or renew your insurance policy you should compare insurance quotes from several different insurance companies. Check online for competitive insurance quotes and make sure you're not paying more than you need to.