10 Ways to Make Life Insurance Affordable
Buying life insurance is one of the best moves you can make to protect your family's financial security. You may provide for your loved ones now, but this may change one day. In addition to paying for funeral costs and any medical expenses you may leave behind, life insurance can provide your family with a source of funds that can be used to cover daily needs and to pay for their future plans like a college education for the kids or retirement plans for a spouse you leave behind. As important as this coverage is, you don't want to pay than is necessary for it. Here are 10 ways you can make life insurance more affordable:
1. Determine Your Needs
Whether you are buying your first life insurance policy or you want to purchase an additional policy to supplement what you already have in place, consider reviewing your needs. Add up estimated funeral costs as well as costs for big-ticket items like a college education for the kids. Then consider how much money your family may need to live without your income. If your spouse works, he or she may already be providing a portion of your family's income needs. Consider how life insurance proceeds could be used to pay off car payments, a home mortgage or other financial obligations to reduce expenses. This strategy could be used in combination with purchasing an annuity with the death benefits for regular monthly income. Purchasing investment property or other income-producing investments with death benefits may also provide your family with a regular source of income without decreasing the lump sum benefit amount. Keep in mind that insurance needs change every few years. You may take on greater amounts of debt, have another child, pay debts off and so forth.
2. Term Vs Whole Life
You may already be aware that term life is more affordable than whole life. Whole life does offer financial benefits, and you may determine that your cash is more wisely used to purchase a whole life policy that will accumulate in value, that offers you an affordable source of loan dollars and that has full life benefits. A term policy will expire at some point, but it is more affordable. Keep in mind that the difference in premium cost between a term life policy and a whole life policy is not wholly accumulated in cash value. The shorter the term, the more affordable the coverage. While you may save money in the near future by purchasing a shorter term policy, keep in mind that rates increase as you get older. If you have coverage needs for the next 20 or 30 years, it is best to buy a 20 or 30 year policy versus planning to renew a 10 year policy when it expires.
3. Shop Online for Rates
The Internet provides you with a great method for shopping for rate quotes. The rate quotes you receive online will not be customized to your unique health status, but many do take into account other key factors such as your age and gender. Shopping online can give you a great idea about which insurance companies you should contact for a full, customized rate quote.
4. Lead a Healthy Lifestyle
Before an insurance company will bind your underwritten life insurance policy, a health physical will be performed. This physical may include a blood test, a urinalysis, a blood pressure check and measuring your height and weight. Everything from the presence of protein and blood in your urine to screening for drug, alcohol and tobacco use will be checked. This physical will be performed in conjunction with a screening or questionnaire that asks about pre-existing health conditions, high risk behaviors like an affinity for sky diving or recreational drug use and more. As soon as you start considering buying life insurance, you should make an effort to improve your health as much as possible. Quit smoking, stop drinking, try to lose a few pounds and increase your exercise level. Even a few percentage points difference on your body mass index may be enough to help you qualify for lower rates.
5. Continue to Improve Your Health
While some last minute efforts to improve your health may prove beneficial in helping you to qualify for a lower insurance rate, making lasting lifestyle changes may be necessary for greater savings. Keep in mind that some insurance companies will require you to eliminate all tobacco products from your life for six months or longer before you can qualify for a lower non-smoking rate. Regular exercise and a healthy diet over time can reduce a high blood pressure issue or other health conditions you are facing today. Keep in mind that you can ask for your health status to be re-evaluated later to see if you qualify to lower rates.
6. Buy Coverage Soon
While you may be considering the option to buy coverage later after you have improved your health and lifestyle, this is not necessarily a good idea. First, you cannot predict death, and you do not want to die without having coverage in place. Further, insurance rates are determined in large part based on your age. The lowest insurance rates are generally available for young adults in their twenties, and insurance rates get more costly with each birthday you have. By purchasing coverage today, you can lock in your insurance rates for years or even decades to come.
7. Ask About Payment Options
Many life insurance companies will provide you with the option to pay your insurance cost on a monthly basis. Some may even assume that is how you want to pay, as this is the option most people choose. However, you should ask about other payment options available. Consider that many insurers offer a discount for paying your premium annually.
8. Consider Supplementing an Existing Policy With a Rider
Insurance needs will change over time. You may be considering shopping for a new or supplemental policy today to meet your current insurance needs. However, many insurance companies offer you the ability to add a rider to an existing policy. This may be a more affordable option to consider than purchasing a brand new policy.
9. Understand What Low-Load Policies Are
You may have heard insurance companies talk about low-load or no-load policies. This is terminology that equates to the fees and costs built into the policy. Essentially, the lower the fees, the more affordable the policy may be for you. Low-load and no-load policies are not typically found through major insurance companies, so you may have to talk to a financial adviser to purchase one.
10. Guaranteed Issue Policies Are Not Suitable for Everyone
Anything that has the word “guaranteed” in it sounds like it's a great deal. However, guaranteed issue policies may be more costly for healthy individuals than other options. These are policies that require a limited health review and are more suitable for those with health issues. However, because they are a riskier type of policy for an insurance company to make, they also are more costly. If you are relatively healthy, you may receive better rates by getting a full health physical done with an underwritten insurance policy.
Keep these tips in mind as you shop for your next insurance policy.
Go online to www.Kanetix.ca/life-insurance to complete an application and compare quotes from top insurance providers in Canada. Saving money on your life insurance has never been easier. Visit Kanetix.ca today and save money.