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Ways to Save on life insurance (15 ways to be exact).

Let’s face it, most of us aren’t going to choose to purchase a life insurance policy when we’re in our early 20s or when we’re in the “best” shape of our lives. Instead, most of us will choose to purchase a life insurance policy when it suddenly dawns on us that we NEED to buy a life insurance policy!

And unfortunately…

This doesn’t always happen when we have a ton of discretionary income to throw around. This is why we wanted to take a moment and list the top 15 ways an individual can save money when purchasing a life insurance policy.

So, without further ado, let’s dive right in!

Top 15 Ways to Save Money on Life Insurance.


 

#1.  Buy Term Life Insurance vs. Whole Life Insurance. 

Now, if your primary goal is to purchase a life insurance policy so that when you die, your family will be protected financially, there is a very good chance that purchasing a TERM LIFE INSURANCE POLICY will be your least expensive option.  

This is because most term life insurance policies will be significantly less expensive (dollar for dollar) than your average whole life insurance policy will be.

“Which is great!”

Especially if all your looking to do is purchase a life insurance policy that will financially protect your family for a set number of years.

That said however…

While a term life insurance policy will be one’s least expensive option, it’s “affordability” will come at a COST. A cost that may or may not be important or applicable to you. 

You see, in most cases, an average term life insurance policy holder is going to “outlive” his or her policy (which is a good thing), meaning that their family is unlikely to ever receive a death benefit from the insured policy.

And…

Term life insurance policies will also lack some of the tax advantages and other money managnement techniques (including infinite banking) which may be available to those who purchase similar sized cash value whole life insurance policies. Which is “OK,” provided that the only reason why you want to own a life insurance policy is so that if you die prematurely, your family will be financially protected (for more information please visit Term vs. Whole Life).

#2.  Don’t buy too much.

While it’s true that more individuals would probably be guilty of not buying enough insurance, occasionally, a person will get “caught up” with trying to buy TOO MUCH insurance!  

Unfortunately…

In cases like these, what often happens is that once an individual determines that he or she may not be able to purchase the amount of insurance that they “believe” they need, they decide to forego purchasing ANY life insurance at all!

Which in our opinion…

It doesn’t seem to make all that much sense. For example, if you’ve determined that you need a $250,000 life insurance policy but aren’t able to afford that much coverage, wouldn’t it make more sense to take a look at what a $100,000 life insurance policy might cost, instead of just deciding not to purchase any life insurance at all?

Well we think so…

This is why we typically encourage folks first to determine how much money they would like to spend on their insurance and THEN see how much coverage this might be able to get them. This way, the focus is more on purchasing a life insurance policy affordable to the policyholder.

#3.  Don’t buy too long of a term.

One of the main arguments that many financial advisors will make when urging their clients to purchase a term life insurance policy vs. a whole life insurance policy is that over time, one’s insurance needs will generally decline.

Which is…

An argument that “generally” makes sense (especially is someone is only looking to purchase a life insurance policy for a death benefit), which is why we would encourage anyone looking to minimize the cost of a new term life insurance policy to pursue this line of thinking one step further and apply this logic to the length of the “term” they are considering.

For example…

If you’re looking to purchase a life insurance policy to protect your two teenage children, does it make sense to purchase a policy that would continue till they’re in their early 30s or 40s? Will your two dependent children still be relying on you financially at this point? If not, perhaps you might be able to save a few bucks by purchasing a ten year or 15-year term life insurance policy instead of at 25 or 30 years?

The same could be said…

For those worried about covering the cost of a mortgage or any potential income that would be lost if you died prematurely if you’re not in your mid-30s or just moving into your new home.

#4.  Consider “laddering” your coverage.

Along these same lines of choosing the right amount of coverage for the right amount of time, choosing to purchase two separate policies with overlapping coverage may be another way an individual can save money on their life insurance over time.

For example…

Let’s take a look at someone in their early 40s with two teenage children and a 30-year mortgage. Presumably, this person is going to need a lot of life insurance, particularly over the next 10 to 15 years. For our example, let’s say a million dollars.

But…

Instead of purchasing a single million-dollar life insurance policy, they instead choose to purchase one $750,000 ten year term life insurance policy which will remain in force while his children are dependent upon him or her, and one $250,000 thirty-year term life insurance policy specifically designed to cover the cost of his or her mortgage.

This way…

They are only paying for the coverage they need when they need it, and over time, their coverage and costs will decrease as their insurance needs decline, thus saving themselves money over time.

#5.  Purchase additional riders, so you get more for your buck!

This way of “saving money” will probably increase the total amount you pay for your life insurance policy but might prevent you from needing to purchase an additional insurance policy you may also be considering. 

An additional policy like a…

  • disability insurance policy, 
  • long term care policy, 
  • critical care policy, 
  • etc…

This is because…

Many insurance carriers will allow an insured to add additional living benefit riders to their term or whole life insurance policy, which can and often will include insurance that they would otherwise choose to purchase separately.  

And in many cases…

When these policies are purchased separately, the combined cost of owning several different insurance policies will cost more. 

This is why it’s always a good idea to “review” all of one’s insurance needs when choosing to purchase a life insurance policy because there is a good chance that you may be able to save some money by adding additional riders to your policy now instead of shopping for additional policies later on.

“OK, so now that we’ve covered how one might be able to save money on their insurance by choosing to purchase the right “type” of life insurance policy, let’s now shift gears a bit and discuss what one can do to QUALIFY for a lower price on their insurance”.

Because after all…

Life insurance is something that you’re going to need to qualify for, and not all folks are going to be able to qualify for the “best” rates!

#6.  Quit smoking.

Simply put, if you currently smoke, quit. If you can’t, then try to change your smoking habits to one that may allow you to earn a “non-tobacco” rate.  

This is because…

Not all life insurance companies will view all tobacco use the same. Some insurance companies may be willing to view chewing tobacco, cigar use, and e-cigarettes (vaping) differently from traditional cigarette use and may even be willing to extend a “non-tobacco” rate to some uses.

This is significant because “non-tobacco” rates will generally two to three times less than a “tobacco rate”!

Now, if you…

Already prefer these “types” of tobacco or nicotine products. Your next step is to be sure that you fully understand which life insurance companies will be more “sympathetic” to your cause and only apply with them.

#7.  Lose Weight.

Losing weight even a pound or two could mean the difference between qualifying for a Preferred vs. a Standard Rate. The only problem is that not all life insurance companies will view one’s weight or weight loss the same way.  

This is why…

You should be aware of three important things when it comes to one’s weight and saving money on life insurance.

First: 

Not all life insurance companies are going to use the same BMI or height to weight ratio when determining what “rate” an individual will qualify for.

Second: 

If you decide to apply for a life insurance policy that will require you to take a medical exam, be sure to take that exam first thing in the morning because, on average, this is when people tend to weigh less than during other times of the day.

Third: 

Losing more than 10 pounds in a single year may actually count against you when applying for a life insurance policy because some companies may “automatically” assume that you will gain ½ of this weight back, which might prevent you from qualifying for the rate you were looking for in the first place!

#8.  Don’t wait till it’s your birthday.

Now, most folks probably already know that age will be one of the major determining factors when it comes to figuring out what “price” one is going to have to pay for their insurance. 

After all…

It makes sense that someone in their 30s would likely have to pay less for their insurance than, let’s say, someone in their 70s.  

“And using this logic, it would also make sense that someone aged 42 would likely pay a little less for their insurance than someone who is 43 of 44.”

But what often gets…

Overlooked is that most life insurance companies don’t use someone’s “actual age” when determining how old someone is. Instead, they use one’s “insurance age”. And one’s “insurance age” is determined by either rounding up or down to whatever birthday is closer.  

So…

If your birthday is four months away from today, the truth is, most life insurance companies are already going to consider you one year older than you consider yourself, which means that you’re now going to qualify for that “older” rate.

This is why…

If you are considering purchasing a life insurance policy and you want to get the lowest rate possible, in most cases, the sooner you apply the better off you’ll be!

#9.  Understand “how” life insurance medical exams work.

Since we just mentioned that one should take their medical exam (if required to take one) in the morning since that’s when they will typically weigh the least, we should also take a moment and discuss other “reasons” why this is a good idea and what exactly a life insurance medical exam is going to look like.

And while…

A complete breakdown of what a life insurance medical exam will look like as mentioned in our article What Do Life Insurance Companies Test For?, we do want to mention that insurance companies are going to review a few “vitals” that will generally score lower first thing in the morning.  

Vitals such as one’s:

  • Blood pressure,
  • Blood sugar,
  • Cholesterol levels, 

As well as screen for the presence of any drugs or alcohol as well.

Which is why…

Generally speaking, most applicants will fair better if they choose to take their medical exam first thing in the morning after they have allowed their body to fast for a minimum of 8 to 10 hours.  

That said however…

Sometimes, it’s better to simply avoid a medical exam entirely. Particularly if you “believe” you are in good health but haven’t received a full physical by your primary care physician in the past year or so, confirming so. Because the last that you’ll want to have happen is to “get diagnosed” while applying for a traditional term or whole life insurance policy.

#10.  Don’t get “diagnosed” while applying for coverage.

We have a saying here at IBUSA which goes a little something like this…

“If you’re not sure what the results of your medical exam or going to show, don’t take one if you don’t have to!”

We say this because…

Nowadays, there are many simplified issue or no medical exam life insurance policy options which will often allow an applicant to qualify for up to 1 million dollars in term or whole life insurance without taking a medical exam!

This means that…

All of those folks who are applying for life insurance in their late 30s or mid-40s who “think” they are in great shape but haven’t actually seen their primary doctor in years end up being diagnosed with:

  • Hypertension,
  • High cholesterol, 

Or type 2 diabetes, when applying for coverage, could have saved themselves a lot of money had they first applied for a no medical exam life insurance policy and then gone and seen their doctor for the first time in years.

In other words, do let your life insurance application exam be the first time you learn that you aren’t in as good of shape as you think you are.

#11.  Don’t mess with the DMV.

Another thing that a lot of folks won’t necessarily think will affect the “rate” or “price” they may end up having to pay for their life insurance is their driving record. This means that if you have multiple moving violations or a DUI for example, you may benefit from waiting a while before you apply for coverage.

Or…

Better yet, you may want to purchase a short-term life insurance policy until which time you may be able to qualify for a better rate once your driving record improves.  

We should…

Also, point out that an individual may have his or her driving license suspended for “non-driving” offenses in some cases. Non-driving offenses such as unpaid parking tickets or maybe even failure to pay child support. In cases like these, many life insurance companies may choose to deny one’s applicant even though your suspension has nothing to do with actually driving poorly. This is why you don’t want to “mess” with the DMV.

OK, so we started off our conversation by first talking about what “kind” of life insurance policy someone should think about buying when trying to save money on their life insurance.  

We then shifted gears and spoke about how one can improve their chances at qualifying for the best “rate”.

So now, we want to take a moment and discuss how one should go about determining “which” life insurance company may be the “best” one for them and what an individual can do to make sure that they don’t end up applying with the “wrong” company!

#12.  Don’t “bundle” your life, home, and auto insurance.

While it may be tempting to “bundle” all of our main insurance needs with one company, there are two main reasons why this may not be a good idea for you.

First…

Most companies that offer these types of “bundles” tend to be more expensive on the life insurance side. As a result, while the combined “bundle” may be priced right, the life insurance “portion” of the cost may represent a disproportionate percentage of the overall cost, which may affect you later on.

This is because…

While the life insurance portion of your “bundled” policies will likely be fixed for the next 10, 20 or 30 years, the home and auto portions won’t be. This means that the only portion of your “bundled price” which is guaranteed to remain the same will be the life insurance portion which is likely already set higher than many other companies you could choose.

Which may not…

Be an issue, but what if you have a small fender bender or a water leak at your home that requires you to make a claim on your home or auto insurance policy? What’s going to happen to those rates then? Chances are they’ll go up, and you’re “bundled discount” is likely to disappear.  

So now…

Instead of saving money, you’re paying more, and you’re probably going to continue paying for your insurance because even if you decide to purchase another life insurance policy elsewhere, you’ll now be doing it as an “older” individual, which will likely mean you’ll have to pay more as well!

The second reason…

Why “bundling” coverage can be bad is because it generally places too much focus on obtaining the right “price” for three different insurance products rather than focusing on finding the “best” life insurance policy for you and your family.

Which may not…

Seem like a big deal, but let’s face it. If you end up purchasing the wrong home or auto insurance, the consequences for your actions can be severe but probably not “life-changing.” However, should you end up purchasing the wrong life insurance policy and die prematurely, the cost of your mistake could be quite significant to the loved ones you leave behind.  

#13.  Work with a professional (outside of a call center).

One thing that has always amazed us here at IBUSA is how so many people will leave the important “process” of purchasing a life insurance policy in the hands of someone working in a high pressure, call center environment.

Now…

We don’t want to suggest that the agents working in some of these larger life insurance brokerages aren’t doing a good job, but let’s face it, chances are if you’re speaking with an agent whose primary goal is to write 4 or 5 policies each and every day, two weeks from now, it probably safe to say that the agent you speak with today isn’t going to remember your name or who you are?  

 After all…

Two weeks from now, the agent you speak with today has probably spoken with several hundred people about buying a life insurance policy and probably has 40 to 50 applications in process!

Which might not…

Be an “issue” unless of course, your application turns out to be one that might need some “special attention” because you’re not in perfect health or perhaps something “pops up” during the underwriting process.  

In situations like these…

One could imagine that having an agent that is simultaneously responsible for 40 to 50 other clients and expected to write 4 or 5 new policies a day might not be able to give the time and attention that your application may need to qualify for the rate you were expecting.

In fact…

This reality is why some of the “larger” brokerages will only allow their agents to accept “Standard or Better” applications and simply recommend accidental death policies for anyone else! 

Now this may…

Not be applicable to someone who will be able to qualify for a Preferred or better rate, but it does drive home the point that an agent working in a large call center may not have as much time to go over all of your options with you like an agent working in a less stressful environment. This is why, it never hurts to get a second opinion after speaking with a giant life insurance brokerage. This brings us to number 14 on our list, which is…

#14.  Shop your options and apply with the “right” company.

Another great way to save money on your life insurance policy is to be sure and “shop” your options and apply with the “right” company.

Which may seem…

Obvious, but the sad truth is that a lot of folks don’t end up doing this. And what’s even worse is that many times even when someone does take the time to “shop” their options, what they’re not aware of is that each life insurance company is going to have their own “rules and regulations” concerning what kind of “rate” an individual might be able to qualify for.

So…

If you simply “compare” different life insurance companies based on price, what you might find is that the company with the lowest price isn’t going to be the company that offers you the “best” rate based on your circumstances. So, while the company you applied with has the “best” price for a Preferred rate because you:

  • Weigh a certain amount, or…
  • Have a family member who was diagnosed with cancer, or…
  • Applied for bankruptcy a year ago, or…
  • Frequently travel to certain parts of Mexico, or…
  • Have been diagnosed with a pre-existing medical condition,

You’re not going to be able to qualify for that Preferred rate. Instead, you’re going to qualify for a Standard rate, which is actually higher than most other insurance companies Standard rate.

Or…

It could even be worse because you may have even been able to qualify for at Preferred rate you wanted so badly had you only applied with the “right” company for you! This is why it’s always nice to compare prices on your own like you can when using our quoter, but then utilize the expertise of a life insurance professional who can then help you determine which company will provide you with the best opportunity for success!

#15.  It’s always better to shop for life insurance when fully covered.

The last bit of advice that we always like to give our clients is this…

“It’s always better to shop for life insurance while you are fully insured.”

We say this because you would be amazed by how many people apply for life insurance and get approved at a rate that they aren’t satisfied with and choose not to accept the policy!

For many…

This may mean that they never decide to purchase a policy, while for others, it may simply mean that their families will go uninsured for a little while longer until they are able to qualify for a better rate somewhere else.

Our only advice…

In cases like these, is…

“Take the policy you’re being offered, and then keep shopping for a better rate.”

We say this because in many cases, what folks like these will find is that sometimes, the first time they are approved will actually be the “best” offer of coverage that they ever receive, and secondly, just because you’ve accepted a policy doesn’t mean you have to keep it!

This means that…

Now that you have been approved for coverage, you can spend the rest of your life trying to find a better policy while knowing the whole time that you’re searching; your family will be well protected!

So…

Don’t be afraid to accept a life insurance policy you think you may cancel later on down the road. The worst thing that can happen to you the insured, is that you’ll end up paying more for your insurance for a few weeks or months while searching for a replacement policy, which is a much better consequence than you dying without any insurance at all!

And there you have it…

Our Top 15 Ways to Save Money on Life Insurance, we hope that you enjoyed this article and that it gave you some valuable information that you can use to help you and your family find the insurance you’re looking for!

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