How Can I Save Money On Life Insurance?

Life insurance plays an important role in securing the finances of many families, and, in its purest sense, is said to offer protection against the risk of dying too soon. Yet, the element of risk to a life insurance company is different than it is for a homeowners or vehicle insurance company.

When an insurance company underwrites a vehicle insurance policy, it hopes you will never have an accident and never file a claim. When an insurance company underwrites a life policy, it knows it must pay a claim at some point in the future because everyone dies. The only unknown is when the claim will be – a year from now or even 50. This is the reason why life insurance costs vary, depending on your age, health, and the amount of insurance you buy.

The best way to identify the policy that gives you the cover you need at the best possible price is to compare both the premiums and the underlying coverage. Some other relevant considerations might also be:

Shop around

Unlike standard policies for vehicle or homeowners insurance, there is no such thing as a standard policy in life insurance. This can make it tough for you to comparison shop among the different life insurance companies. You will have to determine how much you can afford, what type of life insurance you need and which benefits you want to add. This will make it easier for you to perform a feature-by-feature comparison on the quotations you receive.

Be a better health risk

The state of your health is an important determinant of premium cost. The premium goes up or down, depending on how you score against the health indicators used to assess your health risk. The indicators include your weight, cholesterol levels and blood pressure. Before you purchase life insurance, ask your doctor to check these three indicators and to advise you on how to get all of them to optimum levels. Only start shopping for life insurance once you have everything under control.

Buy life insurance earlier

In the actuarial studies used by insurance companies, younger people are statistically likely to be healthier and to live longer. In return, the premiums they pay are considerably less expensive than those paid by older people.

Consider buying term life instead of permanent or whole life insurance

Term life insurance policies characteristically have affordable, low-cost premiums and provide insurance cover for a defined period of time (referred to as ‘the term’). If death of the insured occurs during the term, and the cause of death is not excluded in the policy, the insurance company pays out the face value on the policy to the beneficiaries. There is no investment or savings component in term life insurance, thus your premium will solely be for the amount of insurance you buy. The agreement is quite simple: if you die during the term, your beneficiaries receive the benefit; if you survive the term, you get nothing.

Avoid high-risk recreational activities

If you engage in dangerous recreational activities such as skydiving, scuba diving, or motorcycle driving, it raises your risk profile. Generally, any activity or health concern that tends to shorten your life span will factor into the premium rate. You get assigned to a higher risk pool and will thus be accorded a higher premium. There are companies that are so conservative that their policy may actually exclude, or reduce, payment of benefits if your death results from having engaged in any of these high-risk activities.

Ask yourself if you have to use an insurance broker or a direct life insurer

A broker can help you find a good insurance deal because of their familiarity with the various products on the market. But, a broker represents some costs to the insurance company, such as commissions and administration fees. Direct life insurers do not have to spend for these and pass on the savings to you. But you will have to undertake evaluation of various insurance products yourself and be content with interfacing with a help desk instead of a specific person when you need to deal with any matters relating to your policy in the future.