Life insurance may appear difficult, but you might be surprised to find how affordable it can be – especially if purchased when you are young and healthy. Consider a 20-year term life insurance policy with a face value of $500,000. A 30-year-old could lock in a monthly premium equal to the cost of a movie ticket (and possibly some popcorn, depending on where they reside).
Many of the criteria that determine your life insurance premium are beyond your control, such as your age and health at the time of purchase. Other considerations include the type and amount of coverage you purchase.
However, there are steps you can do to reduce your premiums and obtain the most economical life insurance.
Choose term life insurance
Term life insurance is the most basic and inexpensive sort of policy, and it is adequate for most people. It lasts a fixed number of years and is intended to protect you while you have financial dependents or commitments, such as paying off a mortgage or raising children. If you die within the term, your life insurance beneficiaries will get a settlement that they can spend as they like.
In comparison, permanent life insurance is far more expensive. That is because permanent policies, such as whole life insurance, often provide coverage for your entire life. They also include a cash value component, which can increase over time.
If you’re looking for a permanent policy, universal life insurance and variable life insurance provide payment flexibility. These insurance allow you to customize your premiums, which could be useful if your income changes.
Opt to take the medical exam
If you’re in good health, choose a policy that needs a life insurance medical exam. The test is similar to a physical, and you can arrange an appointment at a time and location that works for you, such as your home. A technician will ask about your medical history, measure your blood pressure, height, and weight, and collect blood and urine samples to determine your nicotine, cholesterol, and glucose levels. The insurer then utilizes this data to determine premiums.
Without these facts, the insurer must assume the risk of the unknown. As a result, life insurance without a medical evaluation is typically more expensive.
Buy a policy as soon as you need it
Life insurance firms reserve the best prices for young, healthy applicants, so if you know you need coverage, acquire it as soon as possible. As you become older, your risk of developing health problems increases, while your life expectancy decreases.
With many types of life insurance, your premiums are fixed for the duration of the policy, even if your health deteriorates. So, if you’re seeking inexpensive life insurance, the sooner you apply, the better.
Try to quit smoking
Using tobacco and nicotine-based products has been related to a variety of health problems, including cancer, lung disease, and diabetes. The American Lung Association also reports that smoking is the biggest cause of preventable mortality in the United States.
Because of this risk, smokers typically pay more for life insurance. Depending on the insurer, using cigarettes, vaping devices, cigars, pipes, chewing tobacco, and nicotine patches or gum may qualify you as a smoker.
To qualify for nonsmoking rates, you normally must demonstrate that you have been smoke-free for at least 12 months. If you’re about to quit but need life insurance right away, you can apply for coverage. Your coverage will be priced at smoker rates, but you may be eligible to seek a pricing review once you have passed your insurance company’s smoking-related time limit. This time range varies by insurer, so it’s worth considering when comparing life insurance providers. You might also consider purchasing a short-term life insurance policy and then applying for a standard term life insurance coverage once you’ve broken the habit permanently.
Buy only as much coverage as you can comfortably afford
Calculate how much life insurance you require and compare rates from several insurers. Then select a policy that meets your budget, or, if necessary, limit your coverage to the maximum amount available for the premium you can afford.
If you have dependents, some life insurance is preferable to none, and you may most likely increase your coverage as your financial situation improves.
Consider rounding up your coverage
Just like buying in bulk, you may be able to save money by obtaining a little greater level of coverage. For example, if you purchase $250,000 in coverage instead of $200,000, you may be eligible for a discount.
Once you’ve calculated how much life insurance you require, inquire about insurers’ “benefit tiers,” or thresholds for premium savings.
Work on improving your health
Insurers calculate your body mass index (BMI) as part of the life insurance application process. Because insurers associate high BMIs with chronic health concerns, if you are overweight or obese according to that index, you will most likely pay a higher premium. With a lower BMI, you may be able to find more reasonable life insurance premiums.
The same applies to cholesterol and blood pressure. If you keep your total cholesterol below 200 milligrams per deciliter (mg/dL) and your blood pressure below 120/80, you should be able to get lower premiums from most insurance carriers. Eating a nutrient-dense diet, exercising regularly, quitting smoking, and limiting your sodium and alcohol consumption might help you improve your health and get into a higher rate class.
Furthermore, several insurers provide policyholders who live healthy lifestyles with cheaper premiums. For example, John Hancock’s Vitality PLUS program allows you to save up to 25% on your premium by eating properly and being active.
Manage any preexisting medical conditions
To obtain affordable life insurance with a pre-existing condition, concentrate on what you can manage.
If you can demonstrate that you are treating your disease by attending frequent checkups, taking your medicine as prescribed, and adhering to your doctor’s recommendations, you may be eligible for standard or preferred rates.
Skip riders you don’t need
When you apply for life insurance, you may have the option of adding extra features to your policy known as “riders.” They’re intended to fill any holes in your coverage, although you might not need them all.
While some riders are free, others increase your overall premium. For example, adding a return-of-premium rider, which reimburses you for premiums paid if you outlive the term, can increase the cost of your policy by up to five times.
Ask about discounts for paying your premium annually
Most insurance companies allow you to pay your premiums on a monthly, quarterly, semiannual, or annual basis. However, some insurers levy an additional service cost to customers who make frequent payments, a practice known as “fractional premiums.”
If you can afford the greater initial payment, you could save up to 5% by paying your premium once or twice a year.
Shop around
With over 800 life insurance firms in the United States, our suggestion is to let them compete for your business. Comparing quotes from multiple insurers is one of the most effective strategies to find low-cost life insurance coverage.
