In this article, I'm going to share with you some tips you can use if you want to know how to save money on life insurance premiums. Many of these things are simple strategies while others will require a change in habits. OK. let's get started with my list.
1. Buy life insurance sooner rather than later
The first question that life insurance companies ask is your age. The older you are the more that life insurance is going to cost you. The younger you are, the cheaper it is.
Obviously you can’t control your age. But what you can control is whether or not you keep waiting to buy insurance.
No matter what your age, if you think you need life insurance, it’s time to look now. That’s because it won’t get any cheaper than it is right now.
2. Stop cigarette smoking, cigar smoking, chewing, vaping or using any kind of tobacco
The second question that the life insurance company will want to know is if you use tobacco products. Smoking and other tobacco use raises your premium by two to three times more than what a non tobacco user pays.
Whether you think it’s fair or not, if you can quit using tobacco, you can save drastically on your life insurance. This would apply to both new policies and existing policies in force.
Every insurance company words there tobacco use question differently. They also will have a different set of policies regarding how long you have to be tobacco free in order to say you are a non tobacco user.
Take the time to read the tobacco use question carefully. Talk to your agent about the question if you need to so that you answer it truthfully.
3. Lose weight, lower your blood pressure and cholesterol
Another big factor after tobacco use is your weight. If you weigh more than you should and can shed some pounds before you apply for life insurance, that’ll help lower your premium.
Do some research to see how much you should weigh at your height and try to get close to that weight.
Better eating habits will help you lose some weight if you need to and also that’ll help in another area.
That is with your blood pressure and cholesterol.
4. Keep your motor vehicle record clean
Insurance companies check your driving history. Speeding tickets, accidents and other moving violations are red flags when the underwriter reviews your application.
Make a point to be more careful driver. If you get stopped for speeding, check into any diversion programs that can keep it off your driving record.
An added benefit to keeping your driving record spotless is you’ll see lower auto insurance rates as well.
5. Keep away from hazardous activities
While things like scuba diving, race car driving, skydiving and other crazy activities can be fun, they also put you at higher risk of dying than other people who don’t participate in those activities.
If your job doesn’t require you to do hazardous things, refrain from doing them so they aren’t held against you when you apply for life insurance.
6. Don’t smoke marijuana (even if it’s legal), do drugs or other illegal activities
The legalization of marijuana in certain states of the country doesn’t mean that insurance companies won’t care if you use it. It’s a good idea to stay away from marijuana use as well as other drugs.
Of course, active drug use is a major concern to an insurance company when they look at your life insurance application. Don’t do drugs.
Also, stay out of legal trouble.
7. Exercise three or more times a week
Insurance companies sometimes give discounts if you are exercising on a regular basis. While exercise alone won’t reduce your rate, if it’s combined with other positive factors on your application, it could.
8. Go to the doctor every year and keep any medical conditions in check
Insurance companies like to see that you are taking care of yourself. If for example, you have high blood pressure, and are going to the doctor every year and keeping it under control with medication, it will look a lot better than if you don’t and could result in a more favorable premium.
9. Don’t buy universal life insurance. Stick to term and whole life only.
If you have read any of my articles, you’ll know that I’m not a fan of universal life insurance. That’s because most are underfunded. That means they may require extra premiums when you get older which can prove to be an expensive problem.
The reality is that many universal life insurance policies are at risk of lapsing in your later years when you need it most. When a universal life policy lapses because it was underfunded, it really was a just very expensive term policy.
While I suggest everyone have at least some permanent life insurance for final expenses, you should make sure to avoid buying any universal life policies. If you feel you need some permanent life insurance, stick to whole life insurance policies only.
Term life insurance is important to have as well and the great thing about term insurance is that it’s cheaper than whole life.
I personally think that everyone should have some of both types of life insurance - some term and some permanent life.
Just make sure that when you buy permanent life insurance, that it’s not universal life. Make sure it’s whole life.
10. Take advantage of your group term life insurance at work (but don’t rely on it)
Group term life insurance may be a source of cheap term life insurance when you are younger. Traditional group term life insurance rates typically go up every five years. Eventually this will price you out of it or it’ll get reduced by an age reduction schedule.
If you are young and your employer offers an issue age based plan that keeps you in the same age bracket, I’d suggest you take advantage of it. An issue age group life plan doesn’t increase in rates every five years.
I don’t suggest you rely on solely on group term life insurance, though. You don’t control it and will most likely outlive it.
11. Buy a fully underwritten policy
In order to get the best life insurance rates from the insurance company, you’ll need to provide a full medical history. You may also need to provide blood, urine, EKG or sometimes even some sort of cognitive testing.
The insurance industry is changing and they now make more decisions based just off the life insurance application and your medical information obtained from the medical information bureau (MIB) than they used to.
However, you can also buy policies called nonmed policies which require less information than fully underwritten policies. In exchange, everybody pays a little higher rate than you might have had you gone through fully underwritten policy.
If you are healthy, you’d be better off going with a fully underwritten policy.
However, if you are not sure how healthy you are, never go to the doctor and never have any lab work done, it might make sense to buy a nonmed policy first. Once it’s in place, then you could replace it with a fully underwritten policy.
12. Don’t lie on the life insurance application
These days insurance companies rely more heavily on the medical history provided on your application matching up with what’s in your medical history provided by the MIB.
If the information you provided doesn’t match what’s in MIB, then the insurance company will take a closer look at your life insurance application and request further medical requirements.
You also don't want to lie on the life insurance application because your claim could be denied down the road.
Make sure you provide your agent with the complete and truthful answers to avoid the underwriter taking a second look at your application.
13. Be properly prepared if you have to take a medical exam
After you have scheduled any medical requirements, don’t go out partying, drinking, smoking marijuana or any other crazy stuff that could negatively affect your results.
I once had someone do that and it had a drastic impact on the premium. So much so that we had to reduce the face amount.
Keep a clean diet and get plenty of rest in the time leading up to the exam.
14. Attach a level term rider to a whole life policy instead of buying separate policies
Each policy written collects a policy fee. So if you want a whole life policy and a term policy and you buy them separately, each policy has this policy fee.
If however, you buy one whole life policy and attach a level term rider to it, you only pay one policy fee. While policy aren’t huge, it’s still a way to save some money.
15. Pay your premiums annually
Instead of paying your premiums monthly, pay your premiums annually, you could save 10 to 15 percent just buy paying the annual premium.
16. Take advantage of pricing bands
When buying term life insurance, insurance companies will sometimes have internal rate charts that make lower face amounts a little more expensive than higher face amounts. What this means is that it’s entirely possible that you could pay close to the same premium for more insurance. Check with your agent when you buy your policy.
17. Check for multi-policy discounts
If you have more than one policy with an insurance company, you might qualify for a multi-policy discount.
18. Remove riders and ratings that no longer apply
For existing policies you have, review them for riders that might not be applicable any more. Also check for rated life insurance policies. A rated policy is one that contained an extra charge because of a health issue or other risk.
You might be able to apply to have these removed or buy new policies that won’t have those ratings.
19. Work with an experienced agent
An experienced agent can make sure you properly navigate through the underwriting process when you buy life insurance. While not everybody can qualify for the lowest possible rate an insurance company will give, an agent familiar with these guidelines and solid knowledge of the insurance companies policies and procedures will help.
Lowest price isn’t everything
Price is important, but not the most important thing when buying life insurance. It’s worth paying a little extra for certain things like a solid company, a good agent, great policies, guarantees and other options.
You often get what you pay for.
Those are 19 tips that might help you save money on any of your new and sometimes existing life insurance. Some are easier than others of course.
Let me know in the comments if you have used any of my suggestions.
But, don’t let not being able to do all these keep you from buying life insurance.
If you need life insurance, you should definitely start the process of getting coverage.