Saving Money on Life Insurance

Why should you pay more for life insurance any more than you pay more than you have to for anything else? People are always seeking ways of saving money on expenses. Life insurance is a very important part of anyone’s financial plan, so why should people not seek ways of saving money on it?

There are plenty of ways that people should be trying to save money on their life insurance. First of all: get life insurance when you are still very young. If you are like most people and you plan on getting married and having children some day, even if you have decided to wait longer than the average person and look around carefully, you should buy this life insurance as soon as possible, such as before the age of 25.

Life insurance premiums are largely based on age. They are also partially based on health; so, since the risk of having health problems increases as you age, why not take advantage of this and get life insurance while you are young and healthy?

Secondly, realize that your life insurance is a personal choice. There are different types of life insurance policies for different people. Some may need a longer term policy to cover their needs. There might be a need to take a particular term policy to use for a specialized need, as in using a descending term policy to cover a mortgage. Don’t take any life insurance policy that you don’t need to meet your needs.

Next, realize that it often pays to buy life insurance on volume. Most businesses understand that the way to make the best money is to give people discounts for buying more at once. In other words, they sell volume. Life insurance is no different.

There are price breaks at certain multiples of $1000 of death benefit. If you need a certain amount of coverage, you can actually save money by purchasing _more_ life insurance. Life insurance is priced in cost per $1000 of death benefit. At certain break points, such as $250,000, half a million, etc, the cost to purchase that many $1000 units of coverage dramatically decreases (as long as you buy them all at once).

It’s better to be overinsured than underinsured, and here’s the fact: most people are underinsured. They buy less insurance than they truly need either because they have a weak or incompetent agent who fails to do a thorough needs analysis on them, or they go with the “get the minimum coverage to save money” mind set.

A lot of people are attracted to $100,000 and $250,000 policies because these are “round numbers” and they sound large. The fact is that people need eight to 10 times their annual salary to have sufficient coverage. A person making “a mere” $40,000 a year thus needs likely $400,000 of coverage. Buy on volume!

It might help you to go with an insurance broker to save money. This is because different insurance companies have somewhat different standards of underwriting. You might be the healthiest person anyone ever met, but have a weekend hobby that’s considered “risky”, such as whitewater rafting. This dangerous hobby of yours can raise your premiums.

You can also have your premiums raised if you like to toke on a cigar twice a week–you’re considered a “tobacco user” by the great majority of life insurance companies if you do that, even though you would have to toke the same way for probably 200 years before you realized an actual health detriment from it.

Life insurance actuaries really hate tobacco from a business standpoint (even though plenty of life insurance agents are smokers) and they err on the side of caution because of it. At any rate, life insurance brokers can find you insurance companies who specialize in cigar smokers and whitewater rafters.

You don’t necessarily have to pay monthly. That’s almost always the most expensive way to pay. Pay semi-annually or annually to get better premiums. If you do pay monthly, look into paying with automatic electronic bankdrafts to save a few bucks monthly. Even a penny saved is a penny earned.

 

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