10 money-saving tips for buying life insurance

By Insurance.com Posted : 10/30/2014

Life insurance on stack of moneyWhen it comes to spending hard-earned money, savvy shoppers get the most bang for their bucks. This is true not only when shopping for groceries or food, but for life insurance as well. To help you, Insurance.com has compiled a list of ways you can save the most when you're in the market to buy a life insurancepolicy.

Let Insurance.com help you find affordable life insurance now.

1.Consider term life first

If most of your goals are short-term and you're not as interested in saving for the long run, term life insurance is for you. Term life insurance typically offers you the most coverage for the least amount of money, and is set up based around spans of time. For example, you may get a term life insurance plan that is set to pay out after five, ten or 20 years.

If your main goal is to extend your policy until death, and you don't mind paying a higher premium, it would be wise to look into a permanent life insurance policy.  These policies include an investment component, known as "cash value," which grows gradually over time and is tax-free, so eventually you could accrue extra savings. You can borrow from the cash value and your policy will staysin effect as long as you repay the money, plus interest, or, you can surrender the policy for the cash.

2. No-load policies

To find lower premiums for variable life insurance, be sure to keep an eye out for "no-load" or "low-load" life insurance policies. These policies have fewer added fees, such as agent commission or fees for marketing, which makes a higher percentage of your premium go to your cash value. To find theses policies, check with a financial adviser who doesn't collect commission from life insurance companies.

3. Skip guaranteed issue policies

If you're healthy, stay away from guaranteed issue policies. Guaranteed issue policies, also know as "simplified" or "quick" policies, may sound too good to be true, because they really are. They do not require a medical exam, making them seemingly ideal, but ultimately much riskier for the insurer. If you are healthy, you will get much better rates by buying a life insurance policy that requires a medical test. Those who buy guaranteed issue policies may end up paying more in premiums than their beneficiaries receive from their death benefits.

4. Compare quotes online

When shopping around for any kind of insurance, looking online is a great way to compare prices and see what different companies have to offer. The more information you give, the more accurate your insurance quote will be.

5. Improve your health

If you are overweight, a smoker, have heart disease, high blood pressure or diabetes, finding affordable life insurance may be difficult. This is because the better your health is, the easier and more affordable it will be for you to buy life insurance. Insurance companies will issue lower premiums if the policyholder is in good health. The less things that may give you a risk of dying sooner, the more affordable your life insurance policy will be. Also, if you do have an outstanding medical condition, you are a smoker or overweight, and you are trying to better your health, be sure to document it. By showing the insurance company your medical files and that you have been trying to improve your health, you may save yourself some money in the long run.

6. Buy what you need

It's not a good idea to under-buy insurance, nor is it beneficial to over-buy, so when you're in the market for insurance, be sure to evaluate what your exact needs are and go from there. A good way of doing that is in the form of an equation: Short-term needs + long-term needs - resources = how much life insurance you will need.

7. Rider policies are helpful in some cases

A rider policy is an extension to an insurance policy that helps you extend you coverage. If your needs change, it may be more cost-effective to purchase a rider policy for additional life insurance-it also doesn't affect your cash value. Be sure to shop around though, you may save more by actually buying a second policy.

8. Buy early

Instead of waiting until there is a real problem with your health, buy life insurance early in life. As you age, the price of your life insurance will increase, so the younger you start, the more you will save. To keep your premium low, you may want to inquire about a "level premium" policy. Which keeps your premium rates the same for a set amount of time.

9. Run your credit report

If there are problems with your credit, you may be denied for an insurance policy or your premiums will sky-rocket because you are considered high-risk. If your credit score is low, the insurance company's main concern is that you will let your policy lapse due to non-payment of premiums. So by rebuilding your credit, you are not only helping that financial aspect of your life, but also the one concerning your insurance.

10. Ask about different payment schedules

Some insurance agencies charge less depending on how you schedule your payments. By paying fractional payments-those are fewer payments over the year-you may pay less over all. For some life insurance companies the same also goes for electronic funds transfer (EFT), which is when they take out the amount of the premium directly from your checking account.

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