Last Updated on September 21, 2020 by Andrew Lee
Life insurance is one of the most effective ways to protect your loved ones even when they suffer from your loss. When you have this kind of coverage, you can rest easy, knowing that you’ll leave them provided for. But like all other insurance products, life cover doesn’t come cheap. However, this doesn’t automatically mean you’d have to settle for a policy that you’ll have a hard time paying for. This guide will steer you in the right direction so you can secure coverage that won’t make a huge dent in your wallet.
Pre-buying money-saving tactics
Before getting into a contract with an insurance company, the National Association of Insurance Commissioners strongly suggests that you first determine the amount of coverage you need, the length of time the policy should last, and of course, your budget limitations. Taking these into consideration will help you avoid buying too high a coverage, while also preventing insufficiencies.
You should also take a look at your current health status and lifestyle. Because you’re buying life insurance, insurance companies will use almost the same list of risk-determining factors to gauge your premiums. So when you smoke, you can expect your policy to have an expensive price tag attached to it. The same goes for being overweight or suffering from obesity. The key takeaway here is to make changes to your lifestyle and take better care of yourself.
Follow the three life insurance rules of thumb
Because overbuying coverage is one of the most expensive mistakes you can commit, it’s important you first establish the amount of coverage not just best suited to your needs and those of your family, but also your finances.
First off is to multiply your annual income by 10. However, if you have kids going to college, you should use the second rule, which is to add another $100,000 for every child. The third is to calculate how much coverage you should purchase with the DIME (debts, income, mortgage, and education) formula.
Following these guidelines will help you come up with a projection close to the actual expenses; thus, helping you avoid buying too much.
Don’t forget to factor in your other assets
Many people forget to consider their other sources of funds when computing the amount of life cover to get.
You can save money on your life insurance without worrying about underinsuring when you have an idea of the value of your other assets. These include your savings accounts, pensions, real estate properties, personal properties, stocks, bonds, and other investment vehicles.
Look for providers offering deals and discounts
With so many people in the United States looking to purchase life coverage, competition is tight among insurance companies. This has led to them coming up with various ways to attract clients, one of which is to offer discounts.
For instance, the Insurance Information Institute recommends shoppers to look for insurers offering deals on certain amounts of coverage. Some providers offer discounts when a customer goes for a policy with a value of $250,000 rather than settling for the lower but more popular $200,000 cover.
Don’t forget to shop around and compare
Last, but certainly not the least, is to take as much time as you can to shop around and compare plans and offers. This is actually the only way to find policies offered at a more affordable price. Just make sure you compare similar packages. Take note of the features of each policy and more importantly, the background and record of the company offering it. You can verify licensure with your state’s department of insurance regulation. For instance, MS residents can contact the Mississippi Insurance Department, while NV shoppers can visit the Nevada Division of Insurance website.
There are plenty of other ways to get around high-cost life insurance premiums, and the above-mentioned ones are just a few of them. So keep these strategies in mind and you have higher chances of securing a policy with enough coverage, but won’t break the bank.