How To Save on Life Insurance: 10 Expert Tips

Here are 10 of the best money saving tips when it comes to buying life insurance.

A life insurance policy is likely to be one of the most important investments you will make.

Everyone wants the best deal they can find. We all want to save money when we buy a financial product such as life insurance.

The good news is that are plenty of great ways that you can save as much as 25% or even much more. All you have to do is follow our money savings tactics before you buy life insurance.

1 – Always Use an Independent Life Insurance Agent

Using an independent life insurance is perhaps one of the best ways to save money when it comes to buying life insurance.

I’m sure you’ve seen advertisements from many individual company agents, companies and call centers that offer deals, incentives or great rates.

For many of you choosing this route, you can end up paying a lot more money than you anticipated.

Company agents, also known in the biz as “captive agents” and individual life insurers provide you with no option whatsoever. There are as many as 850 life insurers out there. They have different products and different underwriting guidelines.

This means you are stuck with the health classification they assign you and the premium you pay. You could even be declined for a policy where another company might approve you.

Call Centers do have access to some excellent insurers, but their focus is on making a quick sale because their agents are under pressure to do so.

An independent life insurance agent has access to many dozens of life insurers. They can provide you with individual service and will walk you through the entire process.

Any medical condition can greatly impact what you pay. Independent agents know which companies are more liberal for a variety of health conditions, such as cancer, diabetes and many other diseases.

An independent agent can find lenient companies for your family history, blood pressure and cholesterol levels, your age, and your height/weight ratio.

They also know which life insurance companies are more lenient for marijuana users or smokers.

And, even if you are in perfect health, an independent agent is the best route when it comes to finding the lowest premiums.

2 – Skip the Lump Sum Payout, Opt for Over Time Instead

Most life insurance companies advertise that your life insurance proceeds will be payable as a lump sum.

But, you probably don’t know that some life insurers allow you the option to have the proceeds payable over a period of years as a second choice.

This option allows you to have a set amount payable over a specific period of years. For instance, instead of paying out $1,000,000 all at once, your heirs can receive $100,000/year for 10 years. Choosing the income stream option can save you as much as 10% or more on what you pay for premiums.

Depending on your financial or family situation, having the proceeds payable as an income stream might be a better choice.

You especially might want to consider this option if your beneficiary isn’t fiscally responsible. Or, you might be looking for a better way to provide ongoing income replacement. And, it can be particularly beneficial for providing for the ongoing financial care of a special needs child.

3 – Buy Multiple Life Insurance Policies for Different Reasons

Many people considering life insurance lump all their needs for buying life insurance together. This could include income replacement, covering the mortgage, college education for the kids and multiple other reasons.

This prompts the prospective life insurance buyer to consider 1 large lump sum coverage when choosing their death benefits.

But, there’s a better approach than buying 1 large policy to cover you for the period you want the policy in force. This approach is known as “staggering or layering” your policies. It simply means you buy 2 or more policies to cover different financial needs for different periods of time.

For instance, let’s say you have a $500,000, 30-year mortgage and college education will cost $250,000 for your kids within the next 10 years. Instead of a $750,000, 30-year term; buy:

  • 1 – $500,000, 30 year term, and
  • 1 – $250,000, 10 year term.

The 2 policies will be less expensive than the 1 longer policy.

You can buy multiple policies for both the long and the short term. Purchasing a couple of shorter term policies along with your main coverage will save you money as opposed to what you would be paying for 1 large premium policy.

And, when the need expires for the shorter term policy such as 1 policy to cover the mortgage or the kid’s college education or other needs, you can cancel them when you no longer coverage. This allows you to have 1 longer term policy to cover your income replacement needs.

4 – Buy a Life Insurance Policy That Requires a Medical Exam

It’s a simple fact that any Term or Permanent life insurance policy which requires a medical exam is 10% cheaper or more than any other type of life insurance policy.

Although you might not want the hassle and prefer the convenience of a “No-Medical” or Simplified Issue policy, you are going to end up paying more. And, don’t be fooled by the advertisements for “Guaranteed Issue” policies either. Just because it sounds convenient to get one of these policies, they are even a lot more expensive.

Why does taking a medical exam cost you so much less?

The reason is that the life insurer has a much better handle on the state of your overall health. With No-Medical or Guaranteed Issue policies, they have a lot less information to rate you. So, of course, they are going to charge more because they are taking a bigger chance to insure you.

5 – Prepare For Your Medical Exam

Taking some time to prepare for a medical exam can easily save you as much as 25% or more on what you pay.

This is because there are roughly 16 different health class ratings. Each change in a rating will cost or save you as much as 25% on your premiums.

All it takes is a few pounds difference or a couple point difference in your blood pressure or cholesterol ratings to affect how much you pay.

So, if you can take a couple or 3 weeks to shed a few pounds, do some exercise within your limits, eat healthier meals, get some good sleep before your exam you can save a bundle.

Oh… and try to avoid drinking coffee before a medical exam because that can raise your blood pressure by a few points.

6 – Buy Life Insurance Before Your Next Birthday

It’s a simple fact that life insurance becomes more expensive as you age. Each passing year, especially when you are older than 30 years of age is going to bump up your premium.

If you are approaching another birthday and need life insurance, buy the policy before you hit that new milestone. And, especially do this if you age 29, 39, 49 etc. Each new decade bumps up the cost of a premium by even more than the decade before.

7 – Pay Life Insurance Premiums Annually Instead of Monthly

When you check the life insurance quotes through Instant Quotes, you will see the quotes for both monthly and annual payments.

But, did you notice that the annual quotes are actually cheaper than what you would pay in total for the monthly quotes?

The reason is that the life insurers have to build in a processing fee for the manner in how you make your payments. The more payments you make – the more they charge.

If you can’t afford to pay annually then many insurers also provide the option to pay quarterly or semi-annually. You won’t save as much as you would on an annual payment but you will save money.

8 – Buy Term Life Insurance Rather Than Permanent

I’m not trashing permanent life insurance here. It’s a very viable option for people who have estate needs, large incomes, need lifetime insurance, or who are seeking additional investment options.

But, if you need life insurance for a relatively basic purpose such as income replacement than you might want to consider a term life insurance policy over a permanent policy.

Most permanent policies will cost you as much as 10 Times more than what you would be for an equivalent term life insurance policy.

If you need a savings vehicle you could always invest the difference in a variety of savings vehicles such as a 401(k), mutual fund or an IRA.

9 – Buy More Life Insurance Coverage

This might seem odd as you are likely thinking that more coverage should obviously cost you more money.

That’s not always the case. This is because life insurance is priced in tiers: usually $100,000, $250,000, $500,000 and $1,000,000.

When you reach the next higher tier, the cost per $1,000 of life insurance decreases. So, if you were thinking that $480,000 is all you need, it is very likely you will pay less on your premium if you were to up your coverage to $500,000.

10 – Request a Health Reclassification

If you currently have a policy and it was based on certain health risks such as smoking, obesity, or a medical condition you can request some companies to reclassify you.

Suppose you were a smoker and have quit for more than a year or two or lost a bunch of weight, then you can save a ton of money getting yourself re-examined and reclassified.

Smokers, for example, pay 3 times more for a policy than non-smokers. The same applies to any medical condition which is under control and there has been no relapse. The longer you have gone without a relapse the better you could be rated and save even more money.

The Easiest Way To Save On Life Insurance Coverage

When it comes to saving money on your life insurance policy, always use the services of an independent life insurance agent. Ask them to help you save money on your policy and they will always be glad to give you insider money savings tips you won’t find elsewhere.

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Spectrum Insurance Group is made up of life insurance agents who are licensed in all 50 states and the District of Columbia. Spectrum Insurance Group has helped 1000’s of consumers purchase life insurance online & over the phone.

All content on this site has been written by life insurance experts & licensed life insurance agents.