Last Updated: September 2020
Life insurance is a big investment. Over the course of a lifetime, a difference in monthly life insurance rates of even just a few dollars can add up to thousands of dollars.
On top of that, life insurance protects your family. While you may be able to find the best rates, you want to be sure you also find an insurer that is dependable and accountable. This might sound like a daunting task, but don’t worry, we’ve got you covered.
Armed with these expert tips, you’ll be able to find life insurance at the best rates possible.
Before we get to our 11 tips for how to save money on life insurance, we want to take some time to address some frequently asked questions we often get asked about life insurance.
- How Much Does Life Insurance Usually Cost?
- 11 Ways to Save Money on Life Insurance
- The Easiest Way to Save Money on Life Insurance
How Much Does Life Insurance Usually Cost?
If you are just beginning your search for life insurance then you may not know the average cost of life insurance. Pricing for life insurance policies varies based on:
- The company you choose
- The different types of life insurance policies
- Your individual situation: age, health, etc.
There are many factors that can increase or decrease the premium. Each applicant will receive quotes that are unique to their situation. However, we can provide some general figures to give you a peek into the premium amounts your peers may be paying.
This example is for a 20-Year Term Life Insurance Policy with a face amount of $500,000.
Premiums are paid monthly. The applicant is healthy, non-smoker, no risky activities. So what will this applicant pay per month for the life insurance policy?
- For a 20-year-old male: $32.53
- For a 50-year-old male: $111.38
- For a 20-year-old female: $25.79
- For a 50-year-old female: $86.98
In our next example, we’re going to use the same 20-Year Term Life Insurance Policy with a face amount of $500,000. Premiums are paid monthly. The applicant is healthy, no risky activities but does use tobacco. So what will the smoker rates be for this life insurance policy?
- For a 20-year-old male: $106.70
- For a 50-year-old male: $490.30
- For a 20-year-old female: $73.20
- For a 50-year-old female: $334.22
As you can see, there are significant pricing variances based on age, gender, and tobacco status. If you run this same quote but use a different life insurer or a different life insurance policy type then you will come up with alternative rates.
This is why it’s so important to do research and look at all your life insurance options to find the best life insurance policy for you and your budget. How else can you save money on life insurance?
11 Ways to Save Money on Life Insurance
We’ve helped 1000’s of people save money on life insurance. Below are 11 ways you can save on money when purchasing your life insurance policy. Over time, these tips can save you $1000’s!
#1 – Research, research, research
You can see from our pricing examples that research is one of the best methods for finding the best life insurance policy at the best price.
Buying life insurance is a big investment over time and it will have a huge impact on your loved ones. So you must approach it the same as buying a house or a car. You never want to go with the first life insurance plan you stumble across. Research, research, research!
It’s always a good idea to work closely with an independent life insurance agent. An independent life insurance agent is not held “captive” by a specific company (like Allstate or State Farm agents) so they are able to write life insurance policies with dozens of different life insurers. This means more choices for you and more competitive rates.
These days many Americans rely on their electronic devices to find life insurance coverage. You can simply log onto your laptop or smartphone and run your own life insurance quotes for comparison purposes.
To save a lot of time and energy, we recommend you run life insurance quotes using only one website that includes multiple life insurance companies.
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#2 – Bundle Your Life Insurance Policy
Do you already have auto insurance? Homeowners insurance? What about insurance on your motorcycle or your RV?
If you have existing insurance policies with an insurance carrier, it’s a great idea to check with that same insurance carrier for life insurance coverage.
The common practice in the insurance industry is to “bundle” customer policies whenever they can. The benefit to you is that great discounts are then offered on each of your existing policies as well as your new life insurance policy.
Bundling discounts vary among the best life insurance insurance companies but statistics show a general range of 5% to 25% for each policy. This means you will be saving money on every insurance policy that is part of the bundling package, including your life insurance coverage. That’s a win-win!
#3 – Maintain A Healthy, Tobacco-Free Lifestyle
The bottom line for life insurance companies: healthy, tobacco-free individuals that do not lead high-risk lifestyles receive the best rates for life insurance.
Carriers assess an applicant’s risk potential during the life insurance underwriting process and the less of a risk you are then the more favorable your rates will be.
The underwriter is looking to see if you are fit, in-control of chronic illness, and complying with medications and doctor visits. Medical underwriting is extensive on permanent life insurance policies and can take up to six weeks.
These are common ailments that increase life insurance rates overall:
- Heart Disease
- High Blood Pressure or Cholesterol
- History of Cancer
- Diabetes Type 1 and 2
- Stroke or TIA
- Sleep Apnea
These aspects of your life can increase your life insurance rates:
- Hazardous occupation
- Family History of Cancer, Heart Disease, or Diabetes
- Criminal History
- Driving History (Multiple Tickets or DUI’s)
- Drug or Alcohol Abuse
- Travel Plans (frequent travel or traveling outside of the U.S.)
- Pilot’s License
- Scuba Diving or Skydiving (any sport that can be classified as “dangerous”)
You can control some of the things above, and for some, you can’t. That’s okay. Please keep this information in mind when you are shopping for life insurance. It can help you better understand why your rates may seem higher than you anticipated.
Also, if there are certain factors you can control such as losing some weight or better controlling your blood sugar levels then please do so. This will certainly save you money on life insurance premiums.
#4 – Stop Smoking
The best tip for keeping your life insurance premiums low is to stop smoking! Smoking is the quickest way to nearly double your life insurance premiums. Life insurance for smokers is more expensive and can often cost anywhere from 2-4 times more than non-smokers.
You must be smoke-free for one year to be considered a non-smoker. Some life insurance companies are only concerned about cigarette smoking or chewing tobacco. However, most other insurance companies will give you higher rates even if you smoke cigars, e-cigarettes, or pipes.
The sooner you quit your tobacco habit, the sooner you can see a reduction in those life insurance rates.
If you already have a life insurance policy and have recently quit smoking, choose a life insurance agent who can help you with reclassification. Chances are, your life insurance provider will allow you to retake the medical exam in attempts to get you reclassified as a lower risk, meaning lower premiums.
Former smokers who have been clean for even a few years often experience life insurance rates 3x lower than smokers, and just slightly higher than non-smokers.
#5 – Rate Consideration
You may already have a life insurance policy in effect and are struggling to make the premium payment.
Before you decide to abandon your current policy, ask yourself if anything has improved with your health or lifestyle since you originally applied. Have you lost any weight? Have you traded mountain climbing for gardening?
If you have made some changes in your life that may positively impact your current life insurance premiums, then contact your insurance carrier to find out what you can do. A good percentage of life insurers will allow an insured person one opportunity to apply for a rate consideration which can result in your premiums being reduced.
#6 – Pay Premium Annually
By paying your life insurance annually, you’ll be avoiding the monthly fees insurers usually charge. Those fees will certainly add up over the years. There may be an additional discount for making your premium payment in full annually.
Finally, you may be able to receive further savings by signing up for automatic premium withdrawals from your bank account.
#7 – Buy a Joint Policy With Your Spouse
Look into a joint life insurance policy that’s shared with you and your spouse. Couples that join their life insurance policies do so because the rates are so much cheaper. This is because the life insurance policy is based on a “first to die” basis. The partner that dies first will be covered by the policy and the surviving spouse will receive the death benefit.
Once a death claim has been filed under a joint policy, it is cashed-out so the living spouse will need to establish a new life insurance policy.
#8 – Buy Only What You Need
The higher the death benefit on your life insurance policy, the higher your premiums will be. So make sure the life insurance policy you buy has exactly the right amount for your family’s needs.
Ask yourself, how much money will the family need to sustain their current lifestyle? What amount of money will your spouse need to cover the mortgage, pay for childcare, or education? What could the cost be for your funeral, burial, and outstanding medical bills?
There are no precise answers to these questions because the variables involved are constantly changing. However, you don’t want to pay premiums for a $500,000 life insurance policy when a $100,000 life insurance policy will do just fine.
#9 – Buy a Policy As Soon As You Can
We all know life insurance rates are deeply impacted by the applicant’s age. The older you are when you buy life insurance, the higher your rates will be.
Life insurance premiums generally increase by about 8% to 10% for every year of age. The reason every year adds more cost is because the life insurance company knows more birthdays means you’re closer to your life expectancy.
The sooner you buy your life insurance coverage, the better off your pocketbook will be. Life insurance for young adults is very inexpensive. It’s always less expensive to lock-in a life insurance rate earlier in life than later.
#10 – Choose Term Life Insurance Over Permanent
Deciding between a term life insurance policy versus a permanent life insurance policy can be challenging. Both types of policies offer unique benefits that can seem very appealing.
If your bottom line is to get life insurance at the lowest rate, then pick a term life insurance policy. According to the Society of Actuaries, permanent life insurance can cost as much as 10 times more than the same amount of a level term life insurance plan.
Keep in mind, securing that lower-cost term life insurance premium does mean you’ll be forgoing features that permanent plans offer like building cash value. Once again, if premium savings is what you are looking for then term life insurance is best.
This does not mean that permanent life insurance is not a good investment. In fact, permanent life insurance policies are often used as investment vehicles that return very good gains on an annual basis. They accumulate cash value over time, and this can be borrowed against, or used to invest. Some policies also yield dividends, and can even be combined with estates and gifted on to the next generation.
#11 – Don’t Buy Guaranteed Issue Life Insurance
If you are a healthy individual that does not participate in high-risk activities, avoid guaranteed issue life insurance. Guaranteed issue life insurance coverage costs on average 10% to 40% more than a term or permanent policy.
The reason guaranteed issue, also known as guaranteed acceptance life insurance, is much more expensive is because they are issued without traditional medical underwriting. The life insurer is taking on quite a big risk by insuring someone without knowing their health history and lifestyle choices. Sidestep these life policies for big savings!
Guaranteed life insurance coverage is good for people in specific circumstances. More often than not, it is purchased by people who are terminally ill, or in very poor health. For people in this category, it can be difficult to get coverage, and guaranteed issue life insurance may be their only option for coverage.
The Easiest Way to Save Money on Life Insurance
Hopefully, our 11 ways to save money on life insurance were helpful and you’ll use them to save yourself money on life insurance premiums. Who wouldn’t want to save money?
Plus, you’re making a long-term commitment when you purchase a life insurance plan so you want to be sure you are making a wise financial investment.
As we touched on briefly at the beginning of this article, speaking with an independent life insurance agent is always recommended in the life insurance application process. Not only can they help you save money, but they can help you understand your policy options front to back to secure you not just the cheapest life insurance coverage, but the best life insurance coverage for you and your family.
Speak with one of our agents today to find out even more ways you can save on your life insurance. Get expert help finding some of the best life insurance rates in the business, from some of the best providers.
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