While 54% of Americans currently own life insurance coverage, this figure is 10% lower than 10 years ago, according to the Life Insurance Market and Research Association (LIMRA). Even worse, about 20% of the current policyholders are underinsured, mainly because they perceive life insurance to be expensive. While life insurance can be expensive, there are ways you can lower the cost of your coverage.
Here’s a look at 12 ways to make affordable life insurance a reality.
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Shop Around
According to the Insurance Information Institution (III), there are currently more than 5,900 insurance companies in the U.S. With each having different life insurance packages, high chances are that you will get a coverage that fits in your budget if you compare their prices.
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Take Advantage of Group Coverage
Most employers in the U.S. offer group life insurance to their employees by deducting a small amount from their salaries to pay for premiums. Generally, such life insurance policies are more affordable compared to individual coverages. You can purchase life insurance through your employer for easier payment of premiums as well as affordability. Besides, you may not be required to take a medical exam to get group coverage.
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Ask for Discounts
A majority of insurance carriers offer discount programs on life insurance coverage. These include bundling insurance packages, healthy living programs, and customer loyalty programs. Take advantage of these programs in order to purchase cheap life insurance. Some insurance companies offer premium discounts for certain coverage levels. Ask your insurance agent about any discounts that may be available to you.
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Avoid Unnecessary Riders
You can add extra features called riders to your insurance policy to extend its existing coverage. However, these enhancements can lead to an increase in your premium rates. Make sure to add only such riders that enhance the value of your policy without causing an unnecessary increase in your premium rates.
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Purchase Life Insurance While You’re Still Young and Healthy
Life insurance is typically cheaper for younger folks. For every year you don’t buy a life insurance policy, the rates rise by up to 10%. Moreover, when you get a policy while young, you’re able to lock in lower rates for the entire term of your policy. This means your premiums will be lower for decades.
Insurers calculate the cost of life insurance based on factors such as age, health condition, and gender, per the National Association of Insurance Commissioners (NAIC). To lower your life insurance costs, ensure you buy the coverage when still young and healthy.
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Maintain Healthy Lifestyle Habits
Typically, healthier people pay lower life insurance premiums. Insurers waive life insurance premiums for people who maintain a healthy lifestyle because the risk is significantly low. While you can’t control certain health conditions, you can work toward being healthier by eating right, avoiding being overweight, not smoking, limiting alcohol use, and generally being mindful about your health.
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Choose Term Life Insurance
There are two main variants of life insurance: permanent life insurance and term life insurance. A term policy covers you for a given period like 15, 30, or 40 years. Conversely, a permanent policy provides you with lifelong coverage. Because term policies are almost always cheaper, you can get cheaper insurance by buying a term life insurance that covers a particular period when you need life insurance coverage most, like when you’re still paying a mortgage or before your kids finish college.
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Use the Ladder Strategy
Your life insurance rates are largely hinged on your policy’s face value. Typically, the higher the coverage amount, the higher your insurance rates. Once you determine the amount of life insurance coverage that you need, you can keep your premiums down by applying the laddering strategy. This means building an insurance ladder by purchasing several life insurance plans that expire at varying periods instead of buying a large policy that covers several decades. By laddering, you can ensure that you have a larger cover initially – perhaps before you finish paying your mortgage or when your kids are younger and depend on you – and reduce your coverage, with time, as your insurance needs decrease.
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Use the Renewal Guarantee Benefit on Term Life Insurance
The renewal guarantee enables you to renew your term life insurance without necessarily undergoing a medical examination. This means you can continue paying lower premiums even if you have an underlying medical condition.
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Pay Premiums on Time
If you fail to pay your life insurance premiums on time, the insurer may charge you a fine, which will increase your premiums. To avoid paying extra money, always pay your premiums on time.
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Pay Premiums Upfront in Lump Sums
If you pay life insurance premiums in lump sums, such as annual premiums, the insurance company may offer you a discount. In other words, monthly premiums are more expensive than annual ones.
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Only Purchase the Amount of Coverage You Need
On top of basic life insurance, insurance providers may offer guaranteed insurability, accelerated death benefits, and long-term care. If you include these add-ons, you will pay additional costs, so only purchase the ones you need.
If you’re looking for low-cost life insurance coverage, you can use these methods to make affordable life insurance a reality. For more information about life insurance coverage, contact the experts at Donald Weiss Insurance Services. Our dedicated team is ready to assist you with all your insurance needs.
