Life Insurance For Less | Money
Buying life insurance can be cheaper than you think, especially if you follow a few fairly simple steps to lower your premiums. Research from LIMRA, a membership organization for life insurers, shows that despite record consumer intention to purchase coverage, “too many Americans mistakenly think life insurance is financially out of pocket. reach or too difficult to obtain “.
If you’re looking for a policy that won’t break the bank, while also covering your loved one’s expenses after your death, there are a number of things you can do to get you the lowest rate possible.
Buy a temporary policy
Permanent life insurance, such as whole life coverage, offers lifetime coverage, as well as a savings component of a policy known as cash value. But you will pay the price for these benefits. A permanent policy can easily cost three to five times more than buying the same amount of term life insurance, says Barb Pietrangelo, financial planner and insurance expert at Prudential. On average, term life insurance policies cost only about $ 165 per year, reports LIMRA.
As the name suggests, term life insurance covers you for a set period, usually between 10 and 30 years. Select a term of office that will cover the years when your family is most in need of protection. This may be the time until your children reach adulthood or your mortgage is paid off.
While you should be careful not to choose too short a term, there is a financial incentive not to purchase coverage longer than you actually need. As a general rule, the longer the term of the policy, the higher the annual premium.
Insure when you’re still young
The main reason for buying life insurance earlier in life is that, as a general rule, the younger and healthier you are, the lower your premium. Buying policy in your 20s or 30s – when you’re less likely to suffer from health conditions like diabetes, high cholesterol, or high blood pressure – lets you lock in the most affordable coverage for decades to come.
“When you buy youth life insurance, your premiums stay the same for the duration of your contract, unless you change the amount of coverage. This will reduce the total amount you will spend on life insurance throughout your life, ”says 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 need coverage. If you still need insurance when the policy term expires, most life insurers offer the option of converting your term life insurance policy to a permanent policy, says John Buenger, CFO principal and advisor at the Rice Agency.
Such a conversion, however, will subject you to the shock of the sticker of a permanent font. Another alternative to continue coverage is to purchase another term life insurance policy. Although the premium is lower than converting the old policy to a permanent policy, you will still pay more than for the original policy because you will be older than when you got this coverage.
However, you may not need the same death benefit that you did decades ago because your kids are alone or you took out your mortgage. So you could offset at least part of the impact of your age on the cost of the policy by purchasing less coverage than you originally had.
The health risks associated with tobacco use mean that insurers set higher premiums for smokers than for non-smokers. Smoking is linked to about 80% to 90% of lung cancer deaths in the United States, according to the Centers for Disease Control and Prevention
“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 requalification for non-smoking rates after quitting for at least 12 months.”
Several life insurers offer discounts on policies if you exercise or take good care of yourself, and are ready to share details about your activity through an app and a portable monitor such as a Fitbit.
John Hancock’s VitalityPLUS plan is structured much like an airline’s frequent flyer plan, with premium discounts of up to 25% depending on how many points you earn through exercise or exercise. eating well. You are also eligible for discounts at thousands of grocery stores on a list of approved food types. Health IQ promises comparable discounts for healthy living on its policies, and Sproutt says it will launch a similar offer in the coming months.
Make premium payments annually
The way 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 monthly, is a cheaper option, he says.
Not everyone can afford to pay annual premiums, but those who can could save up to 5% on premiums, according to the carrier.
Buy only the coverage your family will need
Buying a life insurance policy involves choosing an amount of death benefit that will allow your beneficiaries to be financially solvent in the event of death. As with determining the correct length of policy, it is prudent not to purchase more coverage than your family will actually need.
The Insurance Information Institute suggests that you first consider other sources of income that your family might have access to after your death, such as Social Security and retirement benefits or a life insurance policy sponsored by the insurance company. ’employer.
Then add up the expenses your survivors would incur if you died. These could include funeral costs, replacement of hidden income, such as fringe benefits that are not part of your salary, or replacement costs for any services you provide to the family, such as preparation. income tax returns.
Once you add these numbers up, subtract your family’s total income and other assets from that sum. This should give you a relatively clear picture of the coverage your family will actually need to be restored while you are away. This methodology is more accurate – and may result in less coverage and lower premiums – than some other methods of calculating life insurance needs, such as buying a multiple of your annual income.
Compare the prices
Finally, as with other forms of insurance, the surest way to find the right life insurance at the right price is to compare the offers of different insurers.
This is something you can do on your own if you already know what you need. Nonetheless, you might want to consider working with an independent agent or an online broker such as Policygenius. These middlemen can buy policies from different life insurance companies so you can get the lowest premium, says Adler.
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