Like many things you buy, there are ways to save money on life insurance. While it’s not as easy as taking a coupon to the grocery store for a discount, there are smart things that consumers can do to save money on life insurance.
We talked to financial and insurance experts for their best ideas, and here are 18 of the best ways to save money on life insurance:
“The vast majority of individuals should buy term life coverage anyways, despite what some sales agents say,” Stauffer says, adding that commissions are much higher on permanent life insurance policies. “Unfortunately, this can lead to unethical sales agents pushing them when term is all that is needed,” he says.
The price differences are staggering, he says. Stauffer found price quotes from State Farm for a 30-year-old man in excellent health in California who can get a $500,000 policy at $350 Annually for term for 20 years, or $5,285 for whole.
“If you are planning on getting married or having kids in the future, life insurance is a must,” Stauffer says. “Spend some time getting healthy, as this has the potential to put you in a higher tier when it comes to life insurance. Policy premiums are determined using a lot of metrics, with health being a big one.”
People who use tobacco are more likely to die at a younger age, Stauffer says. Smoking can lead to much higher insurance premiums, easily double what a nonsmoker would pay.
No expensive riders
Some insurance plans have optional benefits that can be added to a policy. They’re expensive and rarely used, Stauffer says. “Cut the excess fat from the policy and stick to the core — insuring your life for your loved ones,” he says.
Save money and invest
Building your assets up to a sizable amount over time can mean forgoing life insurance in later years, Stauffer says. Families with enough money to cover daily living expenses have less of a need for life insurance, he says.
Improve your driving record
Getting lots of tickets shows reckless behavior, “which means that you would take more risks in everyday living and increase the probability of accidents, illness, or death and cause you to look riskier to insurance providers,” says Susan Manwaring, a life insurance agent at The Bright Insurance Agency in Boca Raton, Fla.
Avoid risky behaviors
“That increased probability can also result in a special rider on your policy to exclude benefits when you participate in a risky activity or hobby,” she says.
Get to the right weight for your height
Insurance companies look to your height and weight for an indication of the probability of future or current accidents, illness or death, Manwaring says. Before you get a policy, make sure you’re at the healthy weight for your height. A BMI calculator can help.
Review needs for term of policy
If you have insurance for a specific purpose such as for your children, that’s a finite need that will depend on the age of your children and a finite need is best served by term life insurance, says Tony Steuer, an author and insurance literacy advocate. If you have a 20-year need, you need coverage for 20 years.
Modify payment mode
How often you pay premiums can affect your insurance rate, Steuer says. Insurance companies have service charges for modes other than monthly, says Steuer, who has a calculator on his website to help policy owners determine their savings by paying annually.
Paying annually is usually the cheapest method, giving the insurance company the premium dollars for the full year. Quarterly payments, for example, can lead to paying an extra 4% to 20%, and monthly premium payments can lead to paying an extra 3.92% to 8%, according to Steuer.
Look around at different companies, especially if you have a health condition, Steuer says. Rates for specific health conditions will vary significantly from company to company, so use an online term life quote service.
Don’t drink to excess
Having two or more drinks a day can increase the cost of insurance by roughly 50%, and in some cases insurance companies may decline you, says Patrick Bet-David, CEO of People Helping People, a firm that offers insurance and financial services.
Buy an insurance policy at a young age will save you money over waiting years. Every year you wait, your insurance costs rise, Bet-David says.
Canceling a policy, and then buying another one later, can get expensive.
“One of the things most people don’t know about is that if every life insurance policy holder kept their policies until the end, the companies wouldn’t do as well as they do,” Bet-David says. “Insurance companies make money because they know most people will not keep their policies until the end.”
Don’t buy more insurance than you need
Agents get paid based on selling bigger policies, Bet-David says. Avoid that by using a life insurance needs estimator to determine how much life insurance you need.
Review your existing policy
Life circumstances change, and reviewing your existing life insurance policy can lower your premium if your situation has improved, Bet-David says.
If your health has improved since you got your current policy, you may qualify for a lower rate. The same goes if you quit smoking, your cholesterol has decreased, or you lost weight.
If your responsibilities have changed financially, such as being an empty nester or paying off debt, you could decrease your death benefit by 25% and decrease the monthly premium.
Ask for price breaks
In many cases a $500,000 policy is cheaper than a $480,000 policy because the price break is at $500,000, Bet-David says.
Lower the death benefit
The total amount of the death benefit helps determine the premium, says Allen Sarafyan, a State Farm Insurance agent in Studio City, Calif. However, do this carefully, Sarafyan says.
“Not having enough coverage can negatively impact the beneficiaries or having too much can result in higher premiums,” he says.
Compare quotes for life insurance using the instant quote calculator on this page, or contact us at 888-552-6159 to get your questions answered or apply for life insurance coverage.