20 Ways to Save Big on Life Insurance | Experts explain
Introduction
Life insurance is a critical component of comprehensive financial planning, offering essential protection for individuals and families. However, it can also be a complex product, with various types and features (e.g. term life insurance, whole life insurance, no medical life insurance) that can impact both coverage and costs. Given its long-term nature, the savings accumulated from optimizing life insurance can amount to thousands of dollars over the years.
To shed light on this topic, we’ve consulted the respected expert Lorne Marr, who shares valuable insights into how to effectively manage life insurance expenses. In the following overview, we will explore twenty strategies to reduce life insurance premiums while maintaining a predetermined coverage amount and policy length, helping you achieve significant savings.
How to save on Life Insurance
So let’s start…
#TopicExplanationMax. Potenial Savings1Your current physical healthInsurers offer lower premiums if you are in good health. A healthy BMI can significantly impact your rates.Very High2Smoking habitsStop smoking at least a year before applying for a policy to avoid higher premiums (up to 120%). Even occasional cigar smoking can impact your rates. The impact is higher on Term Life insurance policies than on Whole Life Insurance products.Very High3Medically underwritten vs Guaranteed Life Insurance policyIf you’re in good health, opt for a policy that requires a medical exam to get better rates.Very High4AgeApply for your policy when you’re young to benefit from lower premiums.High5Drinking habitsAvoid excessive drinking to keep premiums lower. Heavy drinkers may see an increase of up to 50%. Casual drinking (1-2 drinks weekly) though will not impact your rates.High6Life Insurance typeTerm Life insurance generally offers lower initial premiums compared to Whole Life or Universal Life policies.High7Job Risk FactorsAvoid high-risk jobs (MMA fighters, bomb squad members, race car drivers), as they can lead to higher premiums.High8Insurance ridersEvaluate additional riders on your policy and remove any that are unnecessary, such as accident death benefits.Medium9Comparing Multiple QuotesGet quotes from several insurers (e.g. via a life insurance broker) to find the best rates, as prices can somewhat vary.Medium10Explore Return of Premiums ConditionsSome policies allow you to get back part of the premiums if you haven’t used them. Check with your broker to see if this is beneficial.Medium11Improved Driving RecordIf your driving record improves, review your premiums with your insurer for potential reductions.Medium12Cancel Mortgage InsuranceIf you have sufficient life insurance, consider canceling mortgage insurance to save money.Medium13Don’t forget Group Life InsuranceGroup Life Insurance from an employer can be a good opportunity to reduce life insurance coverage you buy through a personal insurance policy but remember it ends if you leave the company.Medium 14Regular Annual ReviewEvaluate your policies and coverage every year, as new discounts might become available based on changes in your life situation. For example, as your child grows older, you may need to reserve fewer funds, or if you’ve fully paid off your mortgage, your coverage needs might decrease.Medium15Policy backdatingBackdating your policy can lock in lower rates based on a younger age, potentially saving up to 10% on annual premiums.Low16Bundle Policies for SavingsCombining life insurance with other policies like disability insurance or critical illness insurance can lead to lower premiums.Low 17Joint First-to-Die PoliciesConsider a joint policy for you and your spouse, which is often cheaper than two individual policies.Low 18Annual vs. Monthly PaymentsPaying annually can save you money compared to monthly payments, as insurers often offer discounts for fewer administrative costs.Low 19Membership and alumni discountsSome insurers offer discounts if you’re a member of a professional organization, such as CPA. Graduates from certain universities might be eligible for discounts with some insurance providers.Low 20Policy TimingPurchase your policy before you age up to save on premiums. For example, buy it while you’re still 29 if you turn 30 later in the year.Low
What is outside of your control
Some opportunities to save on life insurance are beyond your control and often relate to factors tied to your past or aspects of your life that you cannot influence. These factors might include your health history, family medical background, or certain lifestyle choices made earlier in life.
However, understanding these aspects can provide valuable insights into potential savings opportunities. Here is a quick rundown of how these uncontrollable elements can impact your life insurance premiums and what you might consider to manage them effectively.
#TopicExplanationMax. Potential Savings1Your Medical HistoryA clean medical record can help reduce premiums, but serious past health issues may lead to exclusions.Very High2 Your Family Medical HistoryA healthy family history can lower your premiums, while a history of serious diseases may significantly increase them.Very High3 Your genderFemale policyholders often pay about 25% less than males. Insurers typically consider the gender you were assigned at birth.Medium4 Safe Driving RewardsA clean driving record helps lower premiums. A poor record can increase your rates by 25-50%.Medium
Final Word
To get the best savings on life insurance, it is crucial to work with an independent broker who has access to policies from multiple providers. Our life insurance specialists can offer you a broader range of insurance solutions than most other brokers, allowing us to navigate through various options to find ways to reduce your costs effectively. By working with us, you benefit from our expertise in identifying and leveraging different strategies to lower your premiums.
To start, simply complete a life insurance quote on a sidebar for an initial, non-committal discussion, and let us help you explore the best opportunities for savings.
