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Life insurance is an absolute must for people to protect their families with and dependents in the event of unforeseen death of the breadwinner. Purchasing life insurance can be done at one shot like paying up for the policy upfront or more popularly by paying installments every month that is calculated on the total amount of your policy and how you wish to spread out your payments. However there are some useful suggestions that can reduce the cost of your monthly payments while maintaining the quality of the life insurance policy.
Life insurance is not exactly a fun topic to discuss when you're seated around a coffee table. Most people avoid thinking about life insurance. It's better to examine your options, educate yourself and invest sensibly. Insurance policies are issued based on various factors like condition of your health, your affordability, the type of life insurance you want, and how much you wish to pay towards the cost of the policy per month. By playing with these factors, you can cut down the cost of your life insurance payments significantly.
1. Are you a healthy person?
If the answer is yes, then choose to buy a policy from an insurance company that offers a medical exam before issuance of the policy. Since the premiums that you pay is directly related to the state of your health (the healthier you are, the less is your life insurance policy premium), take advantage of this by getting yourself medically certified as healthy. The whole concept of life insurance is related to probabilities, so if you're certified as medically fit, the company figures that there are lower chances of an early death, hence the more affordable premium.
2. Stick to buying the amount of coverage you really need
Everyone's life has a different financial structure associated with it. Make a summary of all of your expenses current and expected future expenses-like college education for children, or purchase of property or planning another child. Prepare this list carefully, taking care to err on the careful side. Take stock of these expenses every once in a while, preferably annually - this will give a good idea of how much your family needs to maintain their standard of living even while you're not there. If you find that the life insurance policy that you have purchased adequately covers these expenses, then it is pointless investing in more coverage. Buy the insurance according to your projected expenses.
3. Make a survey before you invest in a policy
There are scores of insurance companies ranging from the bucket shop variety to life insurance companies of international repute. They offer policies of all kinds, covering different aspects and at different prices. Given the diverse products on offer, it would be a good idea to sit down and do nothing except examine various policies in line what you are looking for and then hone in on a good one that covers what you want and offers a reasonable price. You might want to make this kind of survey by:
- Talking to an insurance agent. He will offer a collection of policies for you to sift through.
- You can refer to popular and reputed websites that rate insurance companies. Keep your choice restricted to companies that made it the 'A' list.
- Check on the financial background on the company you are interested in.
4. Opt for term insurance instead of permanent life insurance
Term insurance refers to the concept for insuring yourself for specific periods of time like 5 years or a decade or 15 years. You can renew term insurance when it is about to expire. The cost of investing in term insurance is a lot cheaper than investing in permanent life insurance. The reason for this is that companies figure out that it is more reasonable to expect to live for shorter periods of time than predict longevity for a whole life time. The catch is that most companies prefer selling permanent life insurance more (it represents a more lucrative choice as far as they are concerned) so you'd find clients going for permanent life insurance even though term insurance would have served the purpose just as well.
5. Top-up your current policy
Opting to expand the coverage offered by your current policy is cheaper than investing in a new one. You might want to sit down and figure out how much is covered in your current policy and if you can get adequate coverage by topping up.
6. Invest in life insurance when you are young.
Insurance companies figure that you are more likely to die as you age so invest in life insurance when you are young. Life insurance premiums are likely to be more affordable than when you get older.
7. Consider using workplace group insurance plans
Many employers offer life insurance coverage in the form of group insurance or employee benefit plans. Find out if your workplace has such a plan in place. Group insurance plans often offer lower rates for dependent coverage for family members. The catch is that employment based insurance may not be valid if you change your job or quit.
8. Quit smoking if you want lower rates
Most insurance companies offer much lower rates for non-smokers as they figure that non-smokers are more likely to live. If you were a tobacco user and have now quit, inform your insurance provider as they lower the rates based on the time period for which you have quit smoking.
9. Get yourself in physical shape
Obese people have to pay more rates than slim and fit clients. There is a definite relationship between your obesity levels and your premiums.
10. Opt for no-commission policies
Policies that avoid built-in expenses such as agent's commission ands marketing add-ons are cheaper to buy than those which have these expense tacked on. If you are looking at this option, then an agent who charges a flat fee will be preferable to one who charges based on the policy amount.