Life insurance is an incredibly important financial product. Unfortunately, it’s also relatively costly. With that in mind, I thought I’d put together some tips for saving money when you’re in the market for a life insurance policy.
Any insurer worth their salt will require a physical as part of the underwriting process. The good news is that it’s easy — they’ll send someone out to your home or office. Smoking, obesity, high blood pressure, etc. will all result in significantly higher premiums. So… Leading a generally healthy lifestyle will save you a lot of money on your life insurance premiums.
Buy it only if you need it
Life insurance makes the most sense for people with significant financial responsibilities. If others depend on you for financial support, then you most likely need it. However, if you’re young, unmarried, and childless, you may be able to skip it and bank the savings.
Buy term and invest the difference
The simplest and cheapest form of life insurance is a term policy. While insurance policies with a cash value, such as whole life or universal life, can make sense in certain circumstances, you can save a good bit of money by foregoing the investment component, buying a term policy, and investing your savings on your own.
Don’t buy more than you need
The more coverage you buy, the more it will cost. You don’t want to go cheap and leave your loved ones high and dry, but it also doesn’t make sense to buy more than you really need. Just don’t forget to factor in the effects of inflation.
Pay attention to your payment terms
Most insurers allow you to pay monthly, quarterly, semi-annually, or annually. While paying monthly might sound better than coughing up a year’s worth of premiums in advance, keep in mind that many companies charge for the privilege.
The premiums on identical policies from different issuers can vary widely. Thus, it pays to shop around. Either enlist the help of a reputable insurance agent or do what we did — poke around using a life insurance company finder tool such as the one at FiveCentNickel. Just don’t buy from a company on the brink of bankruptcy in the interest of saving a few bucks.
So there you have it… Six simple tips for saving money on life insurance. If you have any further suggestions, please be sure share them in the comments.
And if you’re generally reviewing your insurance policies, see our articles on how to save money on car insurance, how to save money on homeowners insurance and how to save money on health insurance.
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