7 Ways to Minimize Your Life Insurance Premium
1) The sooner you buy, the better. When you purchase a policy at a younger age, your premiums will be lower. As a young adult, the insurance company assumes that you will live for several more decades, meaning that they have more time to collect payments from you. Paying over a longer period of time will reduce your monthly payments to a more manageable amount.
If you were to purchase a policy after retirement, the insurance company assumes that you do not have that many years left and will charge you more in order to recover their investment in you.
2) Stay healthy. If you are in good shape and don’t smoke, the chances are you will live longer. According to an MSN Money Partner, “When I purchased my term life insurance, I got three times the insurance as a friend of mine, but I paid less. He was overweight, and the result was much higher premiums. If you’ve lost weight since you bought life insurance, get new quotes to see if you can save some money.” So, exercise regularly, eat healthy, and manage your stress.
Part of the way that you can lower your premium is to take a medical examination before your rates are set. This will prove to the insurance company that you are in good health and will probably live a long time.
3) Avoid risk. Participating in hobbies like sky diving, scuba diving, motorcycling, and hunting are very risky and can possibly lead to death. Insurance companies consider these activities “high risk”. If you partake in a risky hobby (or occupation like police officer or firefighter) on a regular basis, your premiums will increase or may be canceled. Avoiding these extreme sports can result in a lowering of your premiums.
4) Know your finances. Use the money you earn more effectively by calculating the amount that you can afford and actually need in coverage. “One rule of thumb is to get life insurance coverage equal to between five and seven times your annual salary,” says Miranda Marquit of BudgetLife. “Another way to calculate your life insurance needs is add up your expenses for each year, and then multiply that by how many years your family might need to make up for your missing income.”
If the number you have calculated is something like $290,000 or $340,000, simply rounding up to $300,000 or $350,000 might actually lower your premiums. This is because the insurance company will determine your premiums based on pre-determined thresholds of coverage.
5) The term life insurance option. Experts recommend a term life insurance policy if your budget is low. This type of coverage does not build cash value and is only valid for a certain period of time, like 10 or 20 years, but you can usually get more benefits for less. As a result, it’s usually less expensive than universal or whole life insurance. If you are still living by the time your policy ends, you may even get a portion of your policy payments back.
6) Shop around. Learn about the differences between life insurance policies, the benefits, and costs. Don’t buy the first policy you learn about. Get quotes from different insurance companies and make comparisons between the features of each. Talk to us - we have several companies and can do the shopping and set a comparison for you to choose from. 740-992-6677 www.insurance-plus.com
Once you have chosen a policy that works best for you, read the fine print before purchasing. Sometimes policies include riders (add-ons) that you personally do not need. This may include disability income, term conversion, accelerated death benefit, and waiver of premium riders. Some people might be interested in these additional benefits, but not everyone.
7) Speak to an agent. An independent insurance agent is the best way to receive the most up-to-date information on the policies that interest you. They will have the experience and expertise to help guide you through the confusing world of policy choices and premium payments.
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