10 Tips to Save on Life Insurance


What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

This Free Software Brings Old Laptops Back to LifeMore

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

21 Restaurants Offering Free Food Right NowSaving Money

7 Dumb and Costly Moves Homebuyers MakeBorrow

House Hunters: Beware of These 6 Mortgage MistakesBorrow

Beware These 12 Common Money MistakesCredit & Debt

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Where to Sell Your Stuff for Top DollarAround The House

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

The True Cost of Bad CreditCredit & Debt

17 Ways to Have More Fun for Less MoneySave

14 Ways to Maximize Your Social Security ChecksGrow

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

10 Companies With the Best 401(k) PlansGrow

8 Ways to Take Control of Your Finances — and Be HappierGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

14 Super Smart Ways to Save on TravelSave

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

The Rich Prefer Modest Cars — Should You Join Them?Cars

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

6 Healthful Treats for Your DogFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

7 Free Sources of Manufacturer Coupons You Can Find OnlineSave

Ask Stacy: How Do I Start Over?Credit & Debt

8 Ways to Get a Good Price on a Shiny New AutoCars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Fixing Your Credit? Do These 5 Things, Avoid These 3Credit & Debt

There are ways to save on virtually anything you buy, from groceries to gas to houses. And yes, life insurance. Here are 10 tips to lower your bill.

Editor’s Note: This post comes from partner site Insure.com.

Just as there are different life insurance plans to meet your needs, there are different ways to save money on life insurance.

Most importantly, shop around for life insurance quotes. There are hundreds of insurance companies offering a wide variety of plans and prices. Comparison shopping can save you big bucks. In addition, here are 10 more ways you can save money on your next life insurance purchase.

1. Consider term insurance

Some financial planners advocate permanent life insurance policies with cash value components because the policies force you to save money. Others recommend you buy term life insurance for the cheaper premium and invest the difference.

But cash value in life insurance should not be considered a traditional investment. Any withdrawals or loans not repaid will reduce your death benefit. Also, if you take a partial withdrawal from the cash value of your policy in an amount greater than your total premiums, the withdrawal in excess of your total premiums is considered taxable income.

Furthermore, the difference in premiums between term vs. permanent life insurance is not just a matter of a few dollars per year. According to the Society of Actuaries, premiums for whole life can be five to 10 times higher than the same amount of level term life, depending on the kind of level term being compared. For example, if you’re comparing the premiums of 30-year level term it will be a smaller multiple, while premiums on a 10-year term policy could be a larger multiple.

Every time you renew term life insurance, your premiums will increase. Renewing a short term life insurance policy over and over isn’t a wise use of money. Instead, buy a long term life insurance policy, or buy whole life insurance if you definitely want to leave money to your heirs.

People with a short-term need generally include those who want life insurance to cover a specific debt — like paying off a mortgage.

2. Seek out low-load policies

“No-load” or “low-load” life insurance policies have fewer expenses built into them, such as agent commissions and fees, than other life insurance policies. This can mean low cost life insurance. For variable life insurance, these lower expenses mean a higher percentage of your premium goes to work for you right away, allowing you to build your cash value faster.

Not many companies sell no-load or low-load policies. No-load policies can be purchased mainly through financial advisors who charge flat fees rather than collecting commissions from insurance companies. Those that sell no-load policies include Ameritas Advisor Services and TIAA-CREF. Also, these policies may not be available in all states.

3. Don’t buy a guaranteed issue policy if you’re healthy

“Guaranteed issue” life insurance policies require no medical exam but may ask a few basic medical questions. Guaranteed issue policies are riskier for the insurer and are, therefore, more expensive than fully underwritten insurance policies.

Guaranteed policies are generally purchased by people who have difficulty obtaining life insurance due to medical problems. If you have some medical problems you’re still likely to get better life insurance rates by opting for an underwritten policy, for which you take a medical exam.

The high premiums, combined with a low face amount for the death benefit, can make guaranteed issue life insurance a less desirable option. With some of these policies, you could end up paying more in premiums after only a few years than your beneficiaries might ever receive from the death benefit.

4. Shop online first

While not all online life insurance quoting services will give you the rock-bottom price for term life insurance, they can still be a useful source of information about prices. Just remember, the more personal information you give, the more accurate your life insurance quotes will be. Your “lowest quote” should be used as a baseline for shopping around.

5. Improve your health

Health problems make it hard to buy life insurance. High blood pressure, diabetes and heart disease are among those conditions that can make life insurance companies pump up your rate.

Then there are rates for smokers and other nicotine users. There’s no escaping a high life insurance price, but shopping around is wise. Some insurance companies will consider you a “nonsmoker” only if you’ve never smoked. Others require you to be “nicotine-free” anywhere from six months to five years to obtain a non-nicotine rate.

If you smoke marijuana, pipes or cigars, but not cigarettes, you still should admit to being a smoker on the policy application.

Insurance companies may request urine or saliva tests to check for the presence of nicotine. If you chew tobacco, you might end up paying smoker rates for your life insurance policy.

Another major health factor is weight. If you’re healthy but somewhat overweight, you will likely be quoted higher rates too.

If you have a pre-existing medical condition that could lead to higher rates, you’ll make your underwriters happier and probably get yourself lower life insurance premiums by showing your insurer a history of improving your health, taking your medications regularly and acting responsibly about your health.

6. Buy only what you need

Nailing down a formula for how much life insurance is an imprecise science. You should ask yourself how much money it will take to maintain your family’s lifestyle if you were to die. Do you have money earmarked for your children’s education? For methods to calculate a life insurance amount, read How much life insurance do you need?

Experts advise that you do an analysis annually or at least once every three years. Also, you should always reexamine your policy whenever you have a major life change. For example, if you have a new baby, you have to recalculate college education needs and child-care costs. If you own a home, a mortgage is likely your biggest financial burden. Because your mortgage balance decreases with each payment, it’s important to include those revised figures in your calculations.

7. If you need more life insurance, consider a rider as opposed to a new policy

Just because your needs change doesn’t mean you should run out and buy a new life insurance policy. In many cases, a rider adding extra coverage to an in-force whole life insurance policy can let you expand your coverage without sacrificing your built-up cash value. Ask your agent if there’s a charge for adding a rider.

8. Buy as soon as the need exists

An advantage to buying life insurance as soon as possible is that your premiums are lower. As you age, life insurance gets more expensive. Many term policies give you the option to renew your coverage at the end of the term without undergoing another medical exam. You also can lock in premiums by asking for a “level premium” policy, which means for a specific time period, say 20 years, your premium rate stays the same. After that term expires, your rates will increase. But if you don’t have any dependents, your money may be better spent elsewhere.

9. Pay your insurance bill annually

Once you’ve found the best insurance policy for your needs, find out if you can save money by paying annually. Some insurers charge fees for monthly billing.

In general, the fewer payments you make over the course of the year (known as fractional premiums), the less you’ll pay overall. Also, some insurers charge less if they can transfer the premium payments directly from your checking account.

10. Ask for a reevaluation if your health improves

It’s possible to save money even after you’ve bought life insurance. Just because you’ve been put in a relatively expensive rate class doesn’t mean you’re out of luck forever.

If you’re paying higher premiums because of a specific health condition, ask your insurance company if you can apply for a rate reconsideration if your health has improved and you’ve sustained better health for at least a year.

If you’ve established a history of lowering your blood pressure, cholesterol, or any other controllable rate-increasing factors, many insurance companies will reevaluate your premiums if asked.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 5 Easy Ways to Save on Your Cell Phone Bill

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,002 more deals!