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11 Tips to Save Money on Life Insurance

In addition to saving money on your life insurance premium, following most of these tips will likely lead to more healthy everyday habits—which in and of itself can help you live a rich, full life.

Although most people don’t like to talk about life insurance, the truth is that this type of coverage is an essential part of any good financial plan – and, by following just a few phroogal rules of thumb, you can obtain the coverage that you need at an affordable premium price.

What is Life Insurance?

Life insurance is a contractual agreement between an individual (the policyholder) and an insurance company, where the insurer agrees to pay out a sum of money (the death benefit) to designated beneficiaries upon the death of the insured person.

In exchange for this coverage, the policyholder pays regular premiums to the insurance company.

There are several types of life insurance, but the two main categories are:

  1. Term Life Insurance: Provides coverage for a specific period, such as 10, 20, or 30 years. The beneficiaries receive the death benefit if the insured person passes away during the policy term. If the insured person survives the term, the coverage typically expires, although some policies may offer options for renewal or conversion.
  2. Permanent Life Insurance: Provides coverage for the entire lifetime of the insured person as long as premiums are paid. Permanent life insurance policies, such as whole life or universal life, also include a cash value component that accumulates over time and can be accessed by the policyholder during their lifetime.

Why is Life Insurance Important?

Life insurance provides financial protection for your loved ones in the event of your death. The death benefit can help replace lost income, pay off debts, cover funeral expenses, and support the financial needs of your beneficiaries, such as your spouse, children, or dependents.

How to Save Money When Buying Life Insurance

Here are just a few ways to save money if you’re in the market to buy life insurance.

1. Compare premium quotes

Get quotes from several top life insurance companies. In some ways, shopping for life insurance can be a lot like shopping for almost any other type of product or service. So, when it comes to price, it is important to check with several top insurance companies.

Working with an independent insurance agent can oftentimes make this comparison process convenient and unbiased, as these agents don’t represent just one specific insurer and their products.

2. Pay premiums annually versus quarterly or monthly

When submitting your insurance premium payments, there is often an additional administrative charge tacked on the more often that you pay throughout the year. Therefore, by making annual premium payments, you can actually save a great deal of money–especially over a long period of time.

As an example, if a 20-year term life insurance policy charges a monthly premium of $31.15 or an annual premium of $356.00 over the policy’s life, the insured would have paid a total of $7,476 in monthly payments but only $7,120 if they had paid annually—a savings of more than $350 over time. This is essentially like getting one free year of coverage.

3.  Buy term rather than permanent coverage

Today, you’re likely to find life insurance policies with many different “bells and whistles” attached. But in reality, life insurance shouldn’t be purchased as an investment. Term life insurance is considered to be the most cost-effective form of life insurance available in the marketplace today.

4.  Purchase coverage early

When you’re young and healthy, purchasing life insurance is likely the furthest thing from your mind. However, this is also the time that you can lock in the very best—and lowest—policy premiums. Therefore, consider purchasing affordable as early as you can.

5. Get healthy

There are a number of health-related factors that can affect the amount a person pays in life insurance premiums. Those who smoke, for example, will typically pay more in premiums than those who do not.

Quitting smoking, exercising, and eating a more healthy diet can all contribute to overall health—and certainly, the healthier you are, the more likely you are to be approved for coverage at affordable rates. Sometimes, you may even be considered “preferred,” potentially allowing you an additional premium discount.

6. Be safe

Believe it or not, the activities you participate in can also influence the amount of premium charged—as well as whether or not coverage will even be approved at all.

Hobbies such as skydiving, auto racing, and scuba diving, for instance, can all factor into the life insurance underwriters’ decision. Therefore, practicing safe hobbies can ultimately result in lower life insurance premiums.

7. Get a medical exam

Before purchasing life insurance, consider getting a medical exam. A clean bill of health can lead to lower premiums since insurers often offer better rates to those deemed healthier. Being in good health could significantly reduce the cost of your life insurance policy.

8. Don’t overinsure

Buying coverage beyond what you actually need is essentially wasting money. You don’t want to do that.

Assess your actual insurance needs carefully. Overinsuring can lead to unnecessarily high premiums. Calculate your financial obligations and the needs of your dependents realistically.

9. Bundle your policies

If you’re purchasing multiple insurance products, such as life insurance, auto insurance, and homeowners insurance, consider bundling them with the same insurer. Many insurance companies offer discounts for bundling policies together, which can lead to overall savings on your premiums.

10. Consider group coverage

Group life insurance policies offered through employers or professional associations may provide coverage at lower rates than individual policies. If your employer offers group life insurance benefits, take advantage of them, especially if they provide adequate coverage for your needs.

11. Review and update your coverage regularly

Life changes such as marriage, the birth of a child, purchasing a home, or changing jobs can impact your insurance needs.

Regularly review your life insurance coverage to ensure it still meets your financial obligations and family’s needs. Adjust your coverage as necessary to avoid overpaying for unnecessary coverage or being underinsured.

In addition to saving money on your life insurance premium, following most of these tips will likely lead to more healthy everyday habits—which in and of itself can help you live a rich, full life.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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