40% of Americans don’t have life insurance in any form.
This is due to a number of reasons, but partially because of the cost of buying life insurance can be so astronomical that it simply doesn’t fit into everyone’s budget.
In this blog post, we’ll talk about the importance of life insurance, and ways you can cut costs on your premium without skimping on your loved ones.
This post will outline a few strategies, through an insurance broker will be able to help you even further if they know your personal circumstances.
Read on for more information on keeping your loved ones safe and protected.
What is Life Insurance?
Like any other form of insurance, life insurance promises to pay out if something happens to you.
In this case, life insurance certifies your actual life. Those named as beneficiaries will receive either a lump sum upon your death or will receive an income stream for a certain amount of time after your death.
While theoretically anyone can have life insurance, it is generally meant to help support your family in the case of your untimely death. Some policies will only cover people who are younger than a certain age. Others may cover you no matter how old you get, but only if you opt into the policy before a certain age.
Likewise, some life insurance policies will not pay out in certain circumstances.
This may mean that if you have a pre-existing condition and die of that condition, your beneficiaries will not receive money. Additionally, it has been common in the past to deny people who commit suicide their life insurance payout.
How Much Does a Life Insurance Policy Pay Out?
How much the life insurance policy pays out depends on how much you agreed originally when you took out the policy. Factors at the time could have been your age, your salary and how healthy you were at the time. Some policies may agree to pay your family your same yearly salary for a set number of years.
Insurance companies will almost always have higher premiums for individuals who are more at risk of dying. As such, the higher your risk of is for dying, according to their math and statistics, the higher your premium will be.
Read on for more information on ways to save on your premiums so that you can be positive your family will stay cared for long past your death.
Get a Policy As Soon As Possible
No one is getting any younger. And as they say, time and tide wait for no man.
Your age plays a factor when it comes to getting a life insurance policy. The older you are, the more likely you are to die. Many companies have a cut off for when they will enroll members, and will not take people past a certain age.
Because of this, you should enroll, the sooner the better.
Not only that, the younger you are when you enroll, the more you save. If you have kids at age 25 and take out a policy then, you’re more likely to pay smaller premiums than if you took it out at 45.
Don’t Buy a Policy Without Medical Underwriting
Medical underwriting is used in many different forms of insurance, including health and life insurance. It refers to having to ensure that you’re healthy enough to take out a policy. In some cases, you may even have to get a physical to take out the policy that you want.
Life insurance companies will often offer better rates to individuals who can qualify for their services with medical underwriting. That’s another reason why you should apply for life insurance before you’re older, as the chances of you developing a condition that can be classified as pre-existing jump up exponentially as you age.
Some life insurance companies will offer policies that forego medical underwriting. This is for people who ordinarily won’t qualify for a policy because of their age, weight, health status or because of their health history. These policies are almost always the most expensive because the company is taking a bigger risk by insuring you.
As such, if you qualify, always go for the policy that asks for a medical exam. While it may not be pleasant, it will help you lower your life insurance quote.
Pay Your Bill Annually Instead of Once a Month
Some insurance companies will offer you a discount for paying in one lump sum. This is because they may charge you fees in order to process a monthly payment.
If you’re able to do so, this is a great way to save money. You also won’t need to worry about getting that bill paid each month, and it makes it one less hassle to worry about when bills are due.
Don’t Always Get an Entirely New Policy
Do you already have life insurance but want to upgrade it? That doesn’t mean you have to take out a whole new policy. Since you’re already a customer of your insurance company, they may be willing to work with you to upgrade your policy without charging you for a whole new one.
Speak to your insurance company about boosting your coverage instead of taking out a new policy.
Let Your Insurance Company Know If Your Health Improves
Were you overweight when you purchased your life insurance? Or were you a smoker? Or perhaps you’d been in and out of the hospital for a couple of years, which put a damper on your rate.
If any of these are the case, they are variables that can and do, change through life. Just because your company has put you in an expensive premium band doesn’t mean you have to stay there for life.
Instead, speak to your insurance company about doing a new physical reflecting your improved health status. In some cases, they may be willing to work with you to bring your rate down even lower than it would have been otherwise.
Knowing this is also a good way to motivate yourself to improve your health. Improved health can not only give you more time with your kids and spouse but also gives you cheaper premiums. It’s a win-win situation for everyone involved.
Consider Insurance That Doesn’t Offer a Lump Sum
The more expensive life insurance policies offer a lump sum to your loved ones if you die. This means that if you pass, they’ll be awarded the entirety of what they’re owed in one go.
A life insurance policy that offers a smaller lump sum and then income streams can actually reduce your premiums, making it easier to pay for.
For example, a policy like this may choose to pay out $1 million. Your spouse and children may then get $200,000 upon your death. The remaining $800,000 will be given to them each month as a salary.
You may decide on how much per month they will get, or the insurance company may decide this. It may also be similar to how much you would get per month when you were working.
Do Your Research Before Buying Life Insurance
While this phrase seems almost worn out in the Internet age, it is an extremely important step that you shouldn’t forget when looking for a good policy. You’ll need to do your research to ensure that you get the best policy for you.
Ask around for life insurance quotes. Go to websites online that compare different insurance companies. Speak to several insurance companies in person. Don’t decide on the first offer that comes along and looks good, otherwise you may find yourself spending more than you need to.
Many people also find that they can save a good amount of money by going through independent life insurance brokers over the bigger chain brokers. Some statistics say that people can save as much as 50% on their premiums going through smaller brokers.
Before you commit, look anywhere and everywhere for the perfect insurance company.
Life Insurance Policies
Buying life insurance is an important part of protecting your family and ensuring they’re taken care of after your death.
But that doesn’t mean you should break the bank in order to be able to afford it. Instead, you should do everything you can to ensure that you look after yourself and your family in the future and in the present.
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