12 Ways to Save Money on Life Insurance (Without Cutting Coverage)
Everybody loves to save money... Especially when it comes to purchasing things like life insurance.
But how do you save money on life insurance, from a reliable company, without cutting back on your coverage?
Believe it or not, there are actually lots of ways to save money on life insurance without cutting back your coverage.
In this article, we've provided some insider's tips to help you decrease the cost of your life insurance policy without skimping on coverage.
Here’s what we'll cover in this post:
Quick Article Guide
Here’s what we'll cover in this post:
Tip #1: Buy Your Policy ASAP
When it comes to buying life insurance, there is no better time than now. The cost of your policy is based on your mortality risk, so the younger and healthier you are, the better. You can still buy a policy when you’re older or have health issues, but locking in your rates now will save you in long-run.
Even if you're lucky enough to have little or no health issues in your 50s or 60s, buying a longer term in your 40s will save you a considerable amount of money. Some companies even offer a 35 and 40-year term, so you won't have to go through the hassle of buying another policy again in the future.
Tip #2: Work with an Independent Agent
In the insurance industry, there are two types of agents. Captive agents and independent agents. We always stress the importance of working with an independent agent that works with lots of companies rather that a captive agent who only works with one insurance company.
When you speak to a captive life insurance agent, they are only allowed to sell you a life insurance policy from their company. That means that what their company offers for $80/month, could be available from another company for as little as $60/month.
When you work with an independent agency like JRC, we compare rates and options from more than 50 top-rated life insurance companies, all of which have different niches, or health impairments they specialize with.
Remember, every company sets their own rates and guidelines, so even if you are in perfect health, another company could offer you a much better rate. The only way to be certain is to compare rates from at least a dozen insurance providers before making a decision.
Tip #3: Take Your Health Seriously
If you’re in good health, you'll probably qualify for better life insurance rates than someone who is has some health issues. You don't have to be an Olympic athlete to purchase affordable insurance, but eating healthy, exercising, and avoiding tobacco can save you a considerable amount of money on your coverage.
Even if you're considered overweight, some top-rated insurers won't penalize you if you exercise regularly. The American Heart Association recommends 150 minutes of physical activity each week, whether that be lifting weights, playing a sport, or even walking.
Tip #4: Layering Your Policies
Oftentimes, our need for life insurance decreases as we get older and closer to retirement age. While you might need more coverage now while you are younger, once your mortgage has been paid down and you've sent your children to college, you probably won't need the same amount of coverage you do today.
So why buy a 30 year term policy with $500,000 of coverage when you might only need $250,000 of coverage in 15 years?
This is where layering your policies comes in. Instead of buying just one policy, you can buy two separate policies with different lengths. This strategy can also be effective for anyone who needs to life insurance to settle a court-ordered divorce decree or collateralize a business loan.
For Example: Let's say you need $250,000 in life insurance coverage to protect your mortgage balance which will be paid off in 10 years. After your mortgage has been paid off, you still want $500,000 in coverage to protect your family until you retire in 20 years.To layer your coverage, buy one $250,000, 10-year term and one $500,000, 20-year term. For the next 10 years, you'll have a total of $750,000 to pay off the mortgage and provide you family with a source of income. In 10 years when your first policy ends, and your mortgage has been paid off, you'll still carry $500,000 of coverage until retirement.
Depending on your health and age, utilizing this strategy could save you 20 to 50% on the cost of your life insurance, without the risk of being under-insured. To determine how much money you can save by layering your coverage, give us a call today at 855-247-9555 or request a free quote online below.
Tip #5: Buy a Term Policy Instead of a Permanent Policy
Most of us will need less life insurance coverage as we get older and closer to retirement age. Instead of purchasing permanent life insurance, you can purchase a long term life insurance policy for a fraction of the price. Most companies offer 30-year terms, and one company even offers a 40-year level term.
Once you've paid down your debt and reached retirement age your need for life insurance should be minimal, but if not, you'll still have options. Fortunately, most term life insurance policies offer a conversion rider that allows you to convert a portion of your term policy into permanent coverage.
You do not have to reprove your health or your income to convert your term coverage, although there is an age limit. With most companies the cut-off for a conversion is age 70, or the end of your term, whichever occurs first. You can learn more about converting your term life insurance policy here.
Tip #6: Pay Your Premiums Annually
If you can afford to pay your life insurance premiums annually, instead of monthly, it could save you as much as 8 or 9% on your life insurance premiums.
Every business prefers to get their money in advance, the life insurance carriers are no different. Most insurers also offer a 3 to 4% discount for paying your premiums semi-annually.
Tip #7: Take the Medical Exam
While affordable no exam life insurance options are available, many life insurance companies will ask you to take a medical exam when you apply for coverage. The company will send a licensed phlebotomist, a nurse, or a medical doctor to your work or home to perform an abbreviated mini-medical exam.
The exam is free, and depending on your health, age, or amount of coverage you're applying for, completing it could save you a lot money. If your insurer uncovers a serious health issue in your records, and they are unable to review recent lab results, they often assume the worst case scenario.
Tip #8: Make Sure Your Policy Has a Guaranteed Level Premium
A guaranteed level premium means that the life insurance company won't increase your rates during your term. If you purchased your policy through a bank or your employer, its important to pay attention to the length of your term. Many employer-sponsored insurance policies have annually increasing premiums.
This means that your payments will increase every year! Buying a longer term will save you money in the long-run, especially if you change jobs or if your employer stops offering life insurance. This may seem unlikely, but the increasing cost of health insurance has forced many companies to abandon their life insurance programs.
Tip #9: Figure Out How Much Coverage You Really Need
Many times, people overestimate how much life insurance coverage they really need, and as a result, they end up overspending on their premiums. When working with an independent agent, it's important to determine how much coverage you really need.
If you’re the sole breadwinner of your household with a mortgage and family, you’re going to need more coverage than a single person without bills or dependents. This article can help you determine how much coverage you need, or one our agents would be happy to provide you with a free needs-analysis.
Tip #10: Don’t Opt for a Lump Sum Death Benefit
Life insurance companies usually pay the death benefit from an insurance policy in one lump sum of money. While this is often the preferred method for people who have a lot of debt, you can also opt to receive a portion each of the policy's death benefit like an annuity.
This is an ideal option if you don't have a lot of debt, but need to provide your spouse with a source of income after you pass away. This is also a good strategy if you're worried that your beneficiary could struggle to manage a large sum of money. Most companies offer a discount if you elect this option upfront, so talk to your agent before you apply.
Tip #11: Ask for a Reevaluation
If you’ve already bought life insurance, but have been working on improving your health for the past year, some companies will allow you to ask for a reevaluation of your health class. Your insurance company will usually ask you to take a new medical exam, and if your results have improved, so will your rates.
This strategy is especially effective for someone who recently quit using tobacco, or anyone who was diagnosed with a health issue like high cholesterol, elevated blood pressure, or type-II diabetes just prior to applying to for life insurance.
Tip #12: Stop Smoking
If you currently smoke cigarettes, you should consider quitting before you apply. Once, you've been cigarette-free for more than a year, the insurance companies will consider you a non-smoker.
If you can't quit cigarettes, consider using a vaporizer, pipe tobacco, cigars, chewing tobacco, or nicotine patches instead. A handful of life insurance companies we represent won't charge you tobacco rates as long as you avoid smoking cigarettes.
Still Have Questions? We Can Help!
JRC is an independently-owned and operatedlife insurance agency that is licensed nationwide. We provide a free consultative service to help you find the best policy for your needs, and we represent more than 50 top-rated life insurance companies.
Our agents are experts who can provide you with an accurate quote based on your age and health, or some advice to help you determine the amount of coverage or term length you need. If you need permanent coverage, we can also help you determine which policy will provide the best fit for your situation.
There is no cost to apply for life insurance, and our shopping services are free! Give us a call today at 855-247-9555, or request a free online quote below to compare rates from dozens of life insurance providers in less than a minute.
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.