Ways to Pay Less for Life Insurance
Buying life
insurance may be less costly than you think, particularly
if you follow
some fairly simple steps to keep your premiums down.
Research from
LIMRA, a membership organization for life insurers,
shows that despite
record-high consumer intent to purchase coverage,
“too many
Americans mistakenly feel life insurance is financially out
of reach or too
difficult to obtain.”
If you’re looking
for a policy that won’t break the bank, while still
covering your
loved one's expenses after you die, a number of moves
can allow you to
score the lowest rate you can.
Permanent life
insurance, such as whole life coverage, provides lifelong
coverage, along
with a savings component of a policy known as its
cash value. But
you'll pay a price for those advantages. A permanent
policy can easily
cost three to five times as much as buying the same
amount
of term life insurance, says Barb Pietrangelo, a financial planner
and insurance
expert at Prudential. On average, term life policies cost
only about $165
per year, LIMRA reports.
As the name
implies, term life insurance covers you for a defined period,
typically between
10 and 30 years. Select a term length that will cover
the years your
family will most need protection. That might be the time
until your
children reach adulthood or your mortgage will be paid off.
While you should
be careful not to choose a term that's too short, there's
a financial
incentive to not buy longer coverage than you really need.
The longer the
policy term, as a rule, the higher the annual premium.
Get insured when
you’re still young.
The main reason
to buy life insurance earlier in life is that, as a rule, the
younger and
healthier you are, the lower your premium. Taking out a
policy in your
20s or 30s… when you're less likely to suffer health
conditions like
diabetes, high cholesterol or high blood pressure… allows
you to lock in
the most affordable coverage for the coming decades.
“When you buy
life insurance young, your premiums remain the same for
the duration of
your policy unless you change the coverage amount.
This will reduce
the total amount you’ll spend on life insurance throughout
your lifetime,”
explains LIMRA CEO David Levenson.
However, the
sooner a term policy begins, of course, the sooner it ends…
potentially leaving
you uninsured at an age where you still require coverage.
If you still need
insurance when the policy term expires, most life insurers
offer the option
to convert your term life policy to a permanent one, says
John Buenger, senior
financial manager and advisor at the Rice Agency.
Such a
conversion, though, will subject you to the sticker shock of a
permanent
policy. Another alternative for continuing coverage is to take out
another term life policy. While the premium will be lower than for converting
the old policy to
a permanent one, you'll still pay more than for the original
policy, because
you'll be older than you were when you got that coverage.
However, you may
not need the same death benefit as you did decades ago,
because your kids are
out on their own or you've retired the mortgage.
So you could
offset at least some of the impact of your age on the policy's
cost by buying a
lower amount of coverage than you originally had.
Quit smoking
The health risks
associated with tobacco use mean insurers set higher
premiums for
smokers than nonsmokers. According to the Centers for
Disease Control
and Prevention, cigarette smoking is linked to about 80%
to 90% of lung
cancer deaths in the U.S.
“Quitting smoking
can save you a lot of money in the long run,” says
David Adler,
president of Adler Insurance Group. “If you already have a life
insurance
policy and have quit smoking, request a re-qualification for
nonsmoker rates
after you've been tobacco-free for at least 12 months.”
Live healthily
Several life
insurers offer policy discounts if you exercise or otherwise take
good care of
yourself, and are prepared to share details about your activity
via an app and a
wearable monitor such as a Fitbit.
Make premium payments annually
How you pay your
premiums can help you save money on life insurance,
says Ben
Reynolds, CEO of Sure Dividend. Paying for your policy once a
year, rather than
every month, is a less expensive option, he says.
Not everyone can
afford to make annual premium payments, but those who
can could save up
to 5% in premiums, depending on the carrier.
Buy only the coverage your family will
need
Purchasing a life
insurance policy involves choosing a death benefit amount
that will allow
your beneficiaries to be financially solvent were you to die.
As with
determining the right policy term, it's prudent to buy no more coverage
than
your family will really require.
The Insurance
Information Institute suggests you first take into account
other sources of
income your family might have access to after your death,
such as Social
Security and retirement benefits or an employer-sponsored
life insurance
policy.
Next, add up the
expenses your survivors would incur if you died.
These could
include burial expenses, replacing hidden income… such as
work benefits
that aren’t part of your wages… or the replacement costs for
any services you
provide for the family, like tax preparation.
Once you have
totaled those numbers, subtract your family's total income
and other assets from
that sum. This should give you a relatively accurate
picture of how
much coverage your family will actually need to be made
whole in your
absence. This methodology is more precise… and may result
in lesser
coverage and lower premiums… than some other methods of
calculating life
insurance needs, such as buying a multiple of your annual income.
Finally, as with
other forms of insurance, the surest way to find the right life
insurance at
the right price is to compare what different insurers are offering.
This is something
you can do on your own if you already know what you need.
Still, you may want
to consider working with an independent agent .
Such a intermediary can shop for
policies from different life insurance companies
so you can get the
lowest premium, says Adler.
Author:
Ana Reina
https://fflheartland.advisorprofiles.com/article/526800
Hayden Childs
Alabama Licensed Agent
(205) 269-1382
Looking for Term Coverage
Consider…
PlumLife
https://www.helloplum.com/agent/childs-806
