7 Underutilized Ways to Save Money on Life Insurance

Ross Quade | Life Insurance | 25 Aug, 2015 | No Comments


There are many different kinds of life insurance plans that can fulfill your needs. However, there are just as many if not more ways to save money on such a plan. Implementing key strategies can save you thousands of dollars on your life insurance. For the most part, life insurance is one of those things that you pay a substantial amount of money for, only never to use it yourself. So isn’t it best that you pay the least amount possible? Here are seven underutilized ways to save on life insurance.


1.  Look For a Low-Load Life Insurance Policy

A “low-load” permanent life insurance policy is one that comes with fewer expenses built into it. This includes agent commissions and additional fees that you would otherwise be charged for with traditional life insurance policies. Purchasing this type of policy means that a higher amount of your premium will go directly to helping you increase the policy’s cash value faster. There are not many life insurance companies that sell low-load policies, and so you may have to search around. However, a financial adviser who only charges a flat fee instead of a commission would be more than willing to help you find this type of policy.


2.  Guaranteed Issue Policy For Medical Issues

A “guaranteed issue” life insurance policy allows you to obtain life insurance without going through a medical exam. This type of policy will guarantee coverage to the user with only several standard medical questions. However, because these types of policies are much riskier to the life insurer, they are one of the most expensive insurance policies to underwrite. Even if you have some medical issues, it is likely the case that you’d be better off by undergoing the medical exam and obtaining a traditional life insurance policy.


3.  Have the Right Mindset About Term Life

The majority of life insurance holders purchase “Term” life insurance. However when doing so, you must go into it with the right mindset. Term life insurance is just like renting your safety net: you’ll pay a certain premium for a specific amount of time towards a fixed payoff. If you pass away during this period, then your insurance company will pay out the amount promised. On the other hand, if your policy’s deadline passes, your coverage will entirely vanish. Lawrence Wentz, a life insurance agency owner, states that you should be cautious about term life insurance policies since their contracts are not as black and white as you’d think. There are many companies out there that will sell a term life insurance policy with a certain rate, and then turn around and charge a much higher rate after just a year.


4.  Only Purchase What You Need

Think carefully about the money that is needed to keep your family’s lifestyle afloat if you pass away. Financial experts recommend that you do a thorough analysis every three years, as well as whenever you have a significant life event occur. It may be tempting to obtain a policy for larger than this amount. However, sticking to a realistic payout will save you money on premiums. To realistically figure out the amount of life insurance you need, think about what your passing away would mean financially, and determine your family’s needs after your death. Think in both short and long-term. Once you’ve figured out an estimate, take away the money you have in your savings account and what you’ll be receiving through work-related policies and Social Security. Whatever the difference is the amount your policy should be.


5.  Look Into a Rider

If you need a larger payout than what your current life insurance policy offers, it does not mean you have to go out and purchase a brand new policy. Instead, it is likely the case that a rider will do just the trick. A life insurance rider will add extra coverage to an already implemented whole life insurance policy so that you can increase your coverage without letting go of your built up cash value.


6.  Keep Away From Commissioned Salespeople

With a commissioned life insurance salesperson, there is only one thing they care about: making money, and the more you buy, the more they’ll make. This means that they will not have your best interest at heart when giving you advice about which policy to purchase. However, keep in mind that steering clear from commissioned salespeople doesn’t mean you should avoid expert advice altogether. There are many life insurance companies that have fee-only planners, who will aid you in evaluating your life insurance needs without having a conflict of interest.


7.  Have Your Rate Reevaluated

Your life insurance policy is not necessarily locked in for the rest of its duration. In fact, you can save money after you’ve purchased the policy. If your health has put you in an expensive rate class, you can improve that class with a bit of hard work. If you are dealing with a higher premium because of a health condition, see if your insurance company will reconsider your rate if you improve your health and have stayed in that health for more than a year. If you maintain a history of actively lowering your cholesterol, blood pressure, and other rate-increasing factors, there are many life insurance companies that will reevaluate your life insurance class upon asking.

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