7 ways to save money on life insurance

In this article, we will discuss the ways you can accumulate savings when buying life insurance.

Get a "low load" or a "no load" policy.

These policies do not involve or have lesser commissions or similar fees built into them. This makes them cheaper alternatives to traditional life policies.

If you are considering a variable type of insurance, the absence of such fees could mean faster build up of your cash value as your money goes straight to the account. Be aware though that not many insurance companies sell these products. Your chance of getting is through a financial advisor. You still need to pay a flat fee in the absence of a commission.

Be sure to check on the financial stability of the company providing you this product.

Do not purchase a guaranteed issue policy when you are in good health.

A guaranteed issue life insurance policy does away with a medical examination. Providers of this type of policy may require an applicant to answer a select number of medical related questions. This product appeals to individuals who have problems securing a traditional policy because of health problems.

The downside to a guaranteed issue policy is that the premiums are too high and the face value is low. In some cases, the accumulated amount of premiums paid can be greater that the amount that the beneficiaries will get.

There is a way you can secure a traditional life policy even if you have pre-existing medical conditions. Go check our guide "Life insurance and impaired health," and read the section "Steps to getting life insurance when you have pre-existing medical conditions."

Improve your health and ask for a reevaluation.

If you have an impaired health, you will not get the best rates out there. If your condition is a serious one, you might not even get a policy anywhere.

However, if you strive to improve your health through proper medication, exercise and care and if you record your history of health improvement, an insurance provider would be happy to accommodate you. If you can convince them that you have become a lesser risk, you could secure a good deal.

If you think you have become healthy since your last evaluation, ask for reconsideration and reevaluation from your provider to confirm the improvement.

Stop smoking.

Yes, you read that right - stop smoking and you can get discounts. Insurers have separate rates for those who smoke and those who do not. The premium prices for smokers can be quite high.

Consider the following information posted by Foxbusiness.com in November 2011: a non-smoker, 35 years old, will pay somewhere between $725 to $800 on a twenty year term policy with a coverage value of $500,000. A smoker of the same age will pay much more - the premium would be somewhere between $1,965 to $2,000 for the same type of policy and same amount of coverage.

When you plan to stop smoking, a provider may give you a period of time to do so, some offer six months, others five years, before they offer you a non-smoker's rate. Plus, you have to undergo the necessary saliva or urine examination.

Review your insurance policy after each major event.

Many major events can impact your current policy.

For instance, the arrival of a new baby to the family means an additional dependent whose future you need to consider. You have to make a new round of calculations for college, childcare and other costs related to raising a child.

If you have gone from being a renter to a homeowner via a mortgage, you need to consider the home loan as well. How will your surviving family cope up with the mortgage in case you die?

The same need to review your policy would come up in the event of a divorce. Such major events can impact your premium payments.

Consider getting a rider.

Our needs change from time to time. In some cases, there could be a need for more life insurance coverage. In this situation, study first if there is really a need for you to buy a new policy or just the addition of a rider to your existing policy.

There are cases where a simple rider will widen coverage. This means you do not have to undergo the process of getting a new policy and you need not sacrifice the cash you have built up on your current policy.

Pay your premiums annually.

Many insurance companies offer the following payment schedules: monthly, quarterly, semi-annual and annual.

Monthly payments mean the amount you pay is more budget friendly. However, it costs a fraction more than the annual payment. So are the quarterly and semi-annual options.

To illustrate the difference, here is an example for a twenty year level term policy:

Annual payment: $1,000
Semi-Annual: $520 x  2 = $1,040 for a year's total
Quarterly: $265 x  4 = $1,060 for a year's total
Monthly: $87.50 x 12= $1,050 for a year's total

The example shows that annual payments can save you between two to eight percent on premium payments.

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