How to Save Money on Life Insurance

October 6, 2010

Saving money on a life insurance policy can make a big difference over time since you’ll be paying life insurance premiums every month for years to come.

Even if you’re concerned about the cost of insurance, buying life insurance is definitely something to consider if you have a family that depends on your income to pay their bills. Here are some steps you can take to save money on life insurance.

Figure Out Your Life Insurance Needs

While you don’t want to get too little life insurance coverage, you also don’t want to pay for too much. Realistically consider how much your family would need to replace your income if you died.

There are different formulas suggested to determine this number, such as seven times your annual income, or an estimate of annual expenses over a number of years.  It’s a good idea to run the numbers several ways, compare the results, and see which estimate seems most accurate for your family’s situation.

There’s a chance your life insurance agent will try and convince you to buy more coverage than you think you need.  It’s a tough call because you want to make sure your family is provided for and you’re basing your numbers on estimates.  Just be sure to understand the costs of the different amounts of coverage and the additional benefits they offer.

Consider Term Life Insurance

Term life insurance will typically cost you less in premiums than whole or universal life. Term life is a good option because it’s relatively inexpensive compared to the coverage it provides you.

Just remember that at the end of the term, you are no longer covered. Try to get enough coverage to last until your dependents will no longer be your dependents and relying on your income.   Remember that a longer term policy is likely to cost more than a shorter term.

Buy Life Insurance Young

Because life insurance companies calculate your likelihood of dying before the term of your insurance coverage is up, you can save money by getting life insurance when you are younger.

I was able to buy a 30 policy for the same price my dad would have to pay for a 10 year policy. The younger you are, the more money you are likely to save on insurance premiums.

Don’t think that you’re already too old to get life insurance because you’re worried it will cost too much.  The more years you wait the more it will likely cost so it’s better to research it today than put it off.

Improve Your Health

You are likely to pay a less in premiums if you are healthier. Before getting life insurance, you will be asked about your health habits (smoking, drinking, etc.) and family history.

Someone is likely to take a blood sample, weigh you, and check your blood pressure. If you appear to be a health risk, it is likely that your premiums will be higher, since the insurance company will figure that you are more likely to die prematurely.

Eating healthy and exercising not only help you feel better but can also save you money on your life insurance policy.

Get Life Insurance Quotes

As you might imagine, shopping around is one of the best ways to save money on life insurance. When you’re reviewing policies you’ll want to make sure you are comparing apples to apples.

Look for premium prices on policies with similar payouts, term lengths and payment requirements. You should also read reviews of the life insurance company, and check with the Better Business Bureau.

The Internet has made it easier to find and compare life insurance, but it has also resulted in a higher number of sub-par companies offering policies online.  Here are a few well known places you can look:

  • State Farm
  • MetLife
  • AccuQuote

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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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3 Responses to How to Save Money on Life Insurance

  • Andrew @ Money Crashers

    These are all great points. The one I think is most often overlooked isn’t the directly financial ones you mention, but the “get healthy” point. Everyone tries to figure out ways to find the best deals and compare rates and assume that is the only variable, when probably the biggest one of all is your own health. Not only are there huge financial benefits to being healthy, but it will drastically improve your quality and length of life.


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