5 Things You Can do Today to Lower the Cost of Your Life Insurance

Life insurance is somewhat of a strange concept. It's the only form of insurance which does not directly financially benefit the person who is insured. Yet life insurance is something which most families own or which they wish to purchase someday.

Before we can talk about simple ways to lower the cost of your life insurance, we had better take just a few seconds to discuss the two basic types of life insurance. When you begin looking at life insurance you will be asked whether you want to purchase Whole Life or Term Life.

If you are only looking at the cost of the premium then Term Life looks like the easy winner, hands down. But there's a little more to the story than just the initial cost of the premium. A Term Life policy has a limited life. In other words, a term policy expires at some point and if you want your life insurance coverage to continue you'll have to buy a new policy – at a higher premium.

If your second term policy reaches the end of its term – that is, it expires – then you'll have to purchase a third policy, at a still-higher monthly premium. So, at a time in life when most people have the fewest resources a term policy will force you to pay the highest price yet for your life insurance.

A Whole Life Insurance policy, on the other hand, lasts your whole life. It doesn't expire and the premium that you paid on the day you bought your policy is the same premium you will pay for your whole life.

Another advantage of a Whole Life policy is that over time your policy will accumulate a cash value, like a savings account. Many people borrow against this cash value for such things as the down payment on a house, or for a luxury purchase.

With all that said, it is still necessary for you to examine the cost of both types of policies carefully as Whole Life can occasionally be outrageously over-priced in comparison to Term Life so it is necessary to exercise caution if you are looking for a truly good deal on life insurance.

Life insurance is all about providing for your family and loved ones when you are no longer here to do so yourself, and in one sense there is no way to place a price on that type of love and commitment. And yet, from a practical point of view, insurance companies do placed a price on that type of love.

The price they set is known as a premium – and this premium is based on a number of different factors. Fortunately there are several things you can do that will affect the size of the premium that you will need to pay in order to protect your family, and this article will deal with 5 specific steps that you can take immediately which should lower the amount you will be asked to pay for your life insurance.

Combining these 5 ideas can result in, potentially, five times the savings. But if even only one of these 5 ideas can be applied to you and your insurance, the savings you can realize could still equal several hundred dollars each and every year.

• Don't wait to buy your insurance. With each birthday that passes the cost of your life insurance will get higher and higher. Regardless of whether you've decided on Term or Whole Life the younger you are when you buy your insurance the less it is going to cost you. This is especially true with a Whole Life policy since the premium will remain constant for your entire life. Ten years from now, when inflation has driven up the cost of everything else, the premium you locked in on your life insurance ten years previously will undoubtedly look like one of the smartest moves of your life!
• Keep your credit record clean. Many people are not aware that their credit score can affect how much they pay for life insurance. Research by insurance companies has shown that people with a high credit score are more likely to pay their bills (including their life insurance premium) on time plus people with a higher credit score tend to see their doctor more often, eat healthier meals and live longer and healthier lives. So start today to reign in your credit card spending and make certain that you pay every loan on time. Do whatever you can to raise your credit score, because the higher your credit score, the lower your monthly premium for your life insurance.
• Maintain a healthy lifestyle. A healthy lifestyle means eating right, exercising and seeing your doctor on a regular basis. But there's more to it. A healthy lifestyle also means no tobacco products of any kind and it also means keeping your weight down to a range that is considered healthy for your age and height. Americans, on the whole, are not good at maintaining a healthy lifestyle. We eat far too much fast and greasy food, we consume too much salt, sugar, fat and calories, we still smoke far too much and more than half of us are considered overweight to the point of near obesity. Non-smokers pay less for life insurance than do smokers – a lot less, as a matter of fact. If you smoked when you bought a life insurance policy but have since quit, let your agent know because you could be entitled to a reduction in your premium. If you are overweight do everything you can to lose at least some weight before you apply for your policy. Losing even a little weight can make a difference and can save you hundreds of dollars each and every year in premiums. Also, if you were heavy when you took out a life insurance policy and have since lost weight, ask your agent if you qualify for a reduced premium. Similarly, if you had high blood pressure or diabetes when you purchased your policy and you have been seeing a doctor regularly and your medical condition has improved, most insurance companies are willing to renegotiate your premium.
• Don't buy a "Guaranteed Issue" policy if you are generally healthy. A "Guaranteed Issue" policy is a life insurance policy that is issued to anybody, regardless of their health, and requires no physical exam or other proof of general health at the time of purchase. Obviously a life insurance company is taking a fairly high risk when it hands someone a "Guaranteed Issued" policy and so these policies carry a very high monthly premium. It can seem tempting to take one of these policies since they are handed out so quickly and easily, but the price you pay for the convenience of grabbing one of these policies is that you will be paying thousands, perhaps tens of thousands of wasted dollars to the insurance company over the course of your lifetime. The one time a "Guaranteed Issue" policy could be a good deal is if you are in very poor health at the time you are purchasing the policy. In that case a "Guaranteed Issue" policy may be your best and possibly only option.
• Shop for a "no load" policy. Traditionally, life insurance salespeople have received a rather substantial commission every time they sold a policy. The money to pay this hefty commission must come from somewhere and guess where that "somewhere" is – that "somewhere" is your pocket. Technically there is no such thing as a "no load" life insurance policy, but today it is possible to find "low load" policies. These are policies that are sold for a flat fee, rather than a percentage commission and the fee you are charged is considerably less than the old-style commission. The savings is passed on to you in the form of lower monthly premiums. Make sure you ask or know ahead of time whether a life insurance policy is "load" or "no load".

There you have it. 5 things you can do right now, today, to save money on your life insurance policy. Hopefully at least one of these suggestions will apply to you and you will be able to implement it and see an actual savings in your premium month after month, year after year.

By the way, if your situation changes and you should ever need a larger policy, instead of canceling your current one and writing an entirely new policy (which almost always necessitates paying a higher monthly premium), consider adding a rider to your policy or even purchasing a smaller second policy. Run the figures on all of your options before canceling a policy with a good premium.

Another thing you can do to save money on your life insurance is to pay your premiums yearly rather than monthly. In the business monthly premiums are referred to as "fractional premiums" and virtually all insurance companies charge extra for fractional premium billing.

The last thing you'll want to do is to go online and find at least 3 different websites that allow you to make quick and easy comparisons of the prices of policies at different insurance companies. Don't make the mistake of just looking at one website since no one website compares all of the different insurance companies and you could easily miss the best deal.

Take your time and make your price comparisons on at least 3 different websites. Then all that's left is for you to choose the best price at a company that you feel confident will still be around in 30 years, and your job is done.

"Live long and prosper."