If you have a home and a family — and sometimes even if you don’t — a life insurance policy is essential. However, it’s also yet another line on your budget, on top of your mortgage, living expenses, retirement savings and other insurance costs. Need a policy, but can’t stomach high life insurance rates? Try one of these tips:
- Look for life insurance term coverage. Term life insurance is suitable for most consumers. Term policies cover you for a predetermined period, with a fixed death benefit and often fixed premiums, which are lower than those for whole life insurance. A 30-year term policy will cover most people through the years in which they’re paying a mortgage and their children are growing up. The best life insurance companies all offer term life, so you have many choices.
- Buy early. There are major cost advantages to buying life insurance as soon as you sign the papers on your house or have your first child — or, in some cases, even earlier. You’ll pay less for coverage the younger you are, and you may be able to qualify for a policy that future health problems would make unattainable.
- Consider more insurance. It’s counterintuitive, but buying more life insurance doesn’t always cost you more. Some companies provide price breaks for customers who opt for a slightly higher level of insurance — say, $250,000 instead of $200,000. There’s no reason to buy coverage you don’t need if it’s more expensive, but if choosing a higher-limit policy actually saves you money, there’s no reason not to take it.
- Give your insurer more information. You may have seen ads for “guaranteed issue” life insurance policies, which will provide you coverage without a medical exam. This may seem convenient, but if you’re young and healthy, it won’t save you money. The more information you give your insurer about the risk you pose, the more accurately it can price your policy — and if you’re in good health, that means savings for you.
- Choose a guaranteed renewal policy. When it comes to life insurance, you don’t always have to choose between term and whole life. A good term plan will allow you to convert to whole life when your plan expires, a time when buying a whole new life insurance policy might be prohibitively expensive. Check for this feature if you decide to buy term life.
As with all insurance policies, one of the best ways to save is simply to shop around. Don’t just go with the first company that sends you a flier in the mail — it may not have the benefits you need, and it may not have the best price.
That said, cost is only one factor when you’re choosing a life insurer. The company you pick should also be financially strong and responsive to customers, and you may pay a little more for good service. It’s also important to buy the right amount of coverage. You should never save money by skimping on the protection you need. NerdWallet’s comparison tool can help you find the right coverage amount and compare prices.
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