As a wise man once said, price is what you pay, value is what you get. That wise man? Warren Buffett, who knows a thing or two about investing well. This could easily be applied when shopping for life insurance or updating the terms of their policy. Obviously, you want to get good value — insurance is meant to provide a level of financial security for those you love most. But you also want to get that value at the best price possible, because it’s always better to keep money in your pocket rather than put in someone else’s.
So how do you go about saving money on life insurance? We’re glad you asked. We have a few friendly pieces of advice below.
If you don’t have it, consider getting it now.
Youth and health are relative things, but it’s a fact of life that you’ll never be younger than you are right now. (And while you no doubt have plans—or hopes—to get healthy in the future, the reality is that, as you age, your health will likely decline, too.)
The upshot? Life insurance is almost certainly more affordable right now than it will ever be. The reason: Insurers are making an actuarial bet on your longevity, and essentially can offer you a lower premium for the same policy, based on the number of years you’ll be paying into it. Also, if your health history changes in the future, it might increase your premium (or even limit your options). Getting covered ASAP is almost always a good idea—you never know when an emergency might strike. It turns out, it’ll save you some money, too.
If you’re a smoker, quit
This is another one that doubles as both good life advice and a potential money-saver. Simply put (and as the surgeon general has been warning for decades), smoking is hazardous to your health. This makes you a riskier bet for insurers, so they will charge you more for coverage. In fact, some studies have shown that this is the No. 1 factor in raising your premium. We understand that it’s hard to break this particular habit, but consider the potential financial savings an extra motivator.
And note: If you’re already insured and you quit smoking, be sure to let your insurer know. You probably won’t qualify for a lower rate right away, but generally, if you’re able to show you’ve gone about 2 years living smoke-free (give or take, depending upon the policy provisions), you will likely save a bit of cash.
Disclose any health issues up front
Basically, any issues will likely be discovered during your exam, so the rate you shopped for might not be the rate you ultimately get. In other words, disclosing your health history is important for you to find out the actual rate, which is important for comparison shopping. (For example, some insurers charge more than others to insure people with diabetes. Disclosing this condition up front makes it easier to find out which insurer will offer you the best rate.)
Buy what you need
Term life insurance covers you for a specific period of time, for example, 10, 20 or 30 years. Your hope is that you never need your term life insurance policy to pay out (because, you know, that means you outlived it). Because of that, you want to pay no more than is absolutely necessary. Fortunately, it’s never been easier to determine how much term life insurance you need. And again, obviously, but underinsuring can prove expensive in a different way—not for you, but for the loved ones who needed more coverage. You’ll also want to make sure your policy covers an adequate number of years. Again, no more and no less.
Decide what kind of policy to buy based on your needs
When shopping for life insurance, you will come across both term and permanent life insurance (whole life insurance is an example of one type of permanent insurance). We’ve already talked about term life insurance and its features. Permanent life insurance offers lifetime coverage, and includes a cash accumulation feature that builds value over the course of the policy. That also means that premiums for permanent life insurance are significantly more expensive than term insurance. It’s also more complex, and might require the assistance of a financial professional. Want to know more? Learn more about what type of life insurance may be a good fit for you here.
If you’re healthy, consider a medically underwritten policy
We get it: Taking a medical exam can seem like an inconvenience. But consider, for a moment, your insurer’s point of view: Insuring someone without having all his or her medical information is a risk, and your whole business is assessing (and charging for) risk. In other words, if your policy isn’t medically underwritten, it will almost certainly cost you more because your insurer will charge you for this unknown risk.
As we said above, to get the most accurate rate on your policy, be completely transparent about your medical history and overall level of health. A medically underwritten policy gives the insurer the most information to work with. Here’s how you can prepare for your life insurance medical exam.
Watch for level premiums
This is another way of saying that what you pay at the start of your coverage is what you’ll pay every month for the duration of your policy. If you don’t have this option, you will pay a higher premium as you age, which obviously will cost more money.
Another thing to look into: Whether your insurer offers a discount for making annual, rather than monthly, payments. (This might also reduce fees.) Obviously, this means paying a larger lump sum, and not everyone can afford to do this. But if you can, it’s worth considering.
Behold, the glory of capitalism! You, the consumer, can choose from an array of suitors after you’ve narrowed down the list to insurers who suit your needs. One way to do this is to hire a broker to shop for you, which can spare you the hassle of requesting quotes from a range of insurers. (Just know that, by law, these brokers cannot negotiate better rates for you—insurers must offer you the same rate they offer the broker.) If you’ve decided to get term life insurance, good news – in the 21st century, you can also quickly and easily get a quote online.
Keep in mind that you can’t necessarily put a price on some things—for example, the convenience of applying for insurance online. You should also check the ratings of insurance companies to make sure the company that issues your policy is in good standing.
When it’s all said and done, life insurance is like anything else: You want the best you can afford. Fortunately, there are ways to increase the value you get while lowering the price you pay. (Great tip, Warren.) Ready to get started? Get an estimate for coverage now.
Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children. This article is sponsored by Haven Life Insurance Agency. Opinions are his own.