- Buy term. - It's much more affordable than whole life. (But find out why you may want or need a whole life policy.)
- Shop around. - While you want to make sure you get coverage with a reputable company that's going to be around for the full duration of your policy, you also want to get the best deal. Different insurers charge different premiums. One possible easy way of comparing prices might be to work with an independent insurance agent. Some "independent" agents work almost exclusively with only one or two companies, so be sure to ask for quotes from several insurers.
- Check with your employer and/or union. Your employer or union may automatically provide you with a policy, or at least offer a reasonably priced policy that you can purchase. While you don't want to assume that it's the best policy for you, it's definitely worth looking into. If this policy is relatively inexpensive up to a certain amount, you could always use it in combination with other life insurance policies.
- Pay your premium annually. - The more payments you make each year, the more convenience fees the insurer probably charges. The best thing about this tip is that it's one you can take advantage of even after you've purchased your policy.
- Be in (or get in) good health. - This is rather obvious, but healthy people pay lower premiums. While you can't do anything about your family's medical history, you can make sure that you are a healthy weight, and keep your cholesterol and blood pressure at a healthy level.
- If you smoke, quit. - Enough said.
- Don't engage in overly risky activities. - For instance, if you skydive, fly private planes, or have a dangerous job, your premiums will be higher.
- Consider giving plenty of details to the insurer's representative who questions you. - "Have you seen a therapist?" is apparently as standard question, and I have had to disclose that I have. But I explained that it was to help me work through the grief of two miscarriages. I also explained that my dramatic weight gain and loss was due to pregnancy. I don't know if these explanations made a difference, but they certainly didn't hurt - I was classified in the lowest risk category.
- Find out if rates are lower for multiples of $250,000 of coverage. - For example, $500,000 of coverage might cost the same or less than $450,000 of coverage.
- Don't buy more than you need. - Unless it costs less, of course, as in Tip #9. While I emphasized that it's important to have enough, you'll just be throwing money away if you buy too much insurance.
May 22, 2008
10 Tips for Minimizing Life Insurance Costs
After my friend's husband died last week, I wrote about figuring out how much life insurance you need and what kind of policy you should get. Since I've hopefully spurred at least some of you to get new policies if you need them, I figured I'd better share some tips for saving money on your premiums: