Lowering the cost of life insurance
[social_share]Life insurance can seem expensive to some people, although there are ways to cut those rates.
One important step for the life insurance applicant is to shop around. Several quotes should be sought and compared before purchasing or renewing a life insurance policy, and this can often have a dramatic effect on the costs incurred. It’s true that some life insurance providers are more efficient than others.
But different providers also assign different weights to different risk factors, and so will treat a person with the same set of risks in different ways. For example, while it’s always more expensive to insure the life of a smoker, Policy A may charge more to do so than Policy B.
Another way to find the cheapest form of life insurance is to use a broker. Insurance brokers are trained and paid to comb the market and find the most suitable policy, at the best price, for their clients. As they are full-time, brokers have a number of advantages. They’re already familiar with most insurance providers, some of which don’t advertise widely or which cater to a narrow market. Brokers are also aware of the questions to ask to find the lowest premium. However, brokers do need to be paid, either on commission, which generally raises the premiums that were just lowered, or through an up-front fee. If price is already an issue, this could make it worse.
Inexpensive life insurance policies are sometimes offered through employers, who use bulk purchasing and other methods to get very low insurance premiums. However, they are not offered by all employers.
Lifestyle changes can sometimes lower life insurance premiums, particularly giving up smoking and losing weight. However, these are long-term changes and won’t help if there’s an immediate cash flow problem.
A more immediate method is to lower the payout. If there’s been a change in the policy holder’s circumstances, the payout previously required may no longer be necessary. This can particularly be the case if formerly dependent children have now grown up or if there’s been a divorce.
However, the policy holder should be careful about taking short-term insurance, particularly annual insurance. Although the premiums are lower, this can be a false economy as it does not take account of the life expectancy at a later stage, as longer-term life insurance does.
