How to Save Money on Life Insurance

Believe it or not, there are often steps you'll be able to take to reduce the cost of life insurance. However, they may not always involve shelling out extra cash immediately. As your primary goal, be sure your policy meets your needs. Buying the wrong benefits with low premiums is a waste, not savings. Beyond that, here are a few ways you can maximize the money you spend on life insurance.

Before You Buy

Once you've determined what kind of life insurance policy to acquire, decide how much of it you want to buy: 

1. Focus on financially sound companies. Many businesses sell life insurance. Restrict yourself to companies that receive top ratings from at least two independent rating agencies. A low premium from a shaky company isn t an excellent investment. See How do I choose a life insurance company? for more details.
2. Make sure to compare the premiums of various companies to obtain a sense of the premium you might pay. In response to the request, online sources may assist, or you can designate an agent or broker to help you calculate the premium. During this research, determine what classification you re suited for. In the vast majority of cases, life insurance companies that sell private policies offer classes called  preferred (non-tobacco),  standard (non-tobacco),  preferred (tobacco), and  standard (tobacco). A few policies automatically exclude people from this class (tobacco).
3. Review group plans offered by employers. Consider participating, even if you have to pay willingly, in your employee life insurance program through your company, as companies frequently subsidize the cost of their insurance plans. You could receive coverage up to a predetermined level without needing proof of good health, which can be helpful for some individuals. You might have your premiums taken from your paycheck through payroll deduction, which can help lend convenience. However, please make sure to compare group and individual rates, as depending on your age and health status, group insurance may or may not save you. In comparing group to individual life insurance, remember to consider whether your group has over $50,000 of life insurance coverage and whether you'll be taxed for that cost.
4. Take care of yourself. Figure out which rate category you happen to fill, and, if necessary, make some healthy changes. Agree not to smoke, maintain a healthy weight and exercise regularly to help yourself qualify for a better rate category.

When You're Ready to Buy

1. Shop around to get the best rate for life insurance. Life insurance is a very competitive business, and you will discover price differences of hundreds of dollars (annually) even among similarly strong corporations for the very same policy.
2. Determine the difference between two insurance policies, one with lower premiums and higher cash values, and the other with higher premiums and lower cash values. One way to use a net cost index is to aggregate these two variables into a single number. The lower the small differences, the more accurate the results, but ignore tiny differences (since the approximations of indexes are based on assumptions, there's often no connection between the indexes and real differences between values). The agent or broker with whom you are conducting business, or the organization from which you are contemplating buying an insurance policy, will offer these numbers.
3. Be aware of premium discounts for particular amounts of insurance. Most companies provide rate discounts for specified insurance amounts. For example, you might actually pay a smaller premium for $250,000 of life insurance than for $200,000, or for $500,000 of life insurance than for $450,000, because premiums are reduced as you increase your amount of insurance.
4. Take care to avoid fractional premiums. Pay premiums on a regular schedule that may be once per month, every six months, once a quarter, or annually. Making life insurance premiums an integral part of your life is probably next to impossible, so be sure to carefully assess how much money you have on hand to pay for them when it's due. If you decide to spend, try setting aside a certain sum of money so that you could pay it at least one year from when the company charges you.
5. If you're looking for an ongoing policy, look into the warranty options that are offered. An initial warranty gives you an option to renew the policy at the end of the year, with a higher premium depending on your current age, but without being required to undergo a physical examination or submit any other proof of insurability. Without the guarantee that your premium isn't changed, your life insurance plan is going to be useless if you become sick. Because your health might worsen, you'll have to pay a lot more for coverage or not receive it at all.