Anyone with financial responsibilities knows the importance of having life insurance, but when starring at the monthly mountain of bills it can be hard to work life insurance into the picture. The truth is however, if it’s hard for you to afford life insurance, you can’t afford not to have it.
The good news is there are multiple ways to get an affordable life insurance policy in place. And while many financial advisors may debate on what is the best type of policy, it may not always be one you can afford. So let’s point out some affordable ways to get a policy in place, because some life insurance is better than none at all, just ask your family and lenders.
Compare Rates With Multiple Carriers
The first and perhaps easiest way to save money would be to compare quotes with all of the life insurance companies on the market. When comparing rates you will find that all companies offer different rates for the same product and coverage amount. The rate you get will be based on your age, sex, location, health, and other factors.
Let’s use our imaginary friend Billy as an example. BIlly is a fairly healthy 35 year old male who is from Alabama and lives a nicotine free life. Billy wants to get a 20 year term life insurance policy for $500,000 worth of coverage. If we compare amongst 30 “A” rated companies, the lowest rate comes in at $29.53 a month, with the highest at $46.34. That’s a $201 annual savings for the same product, same coverage amount, at the same health class.
If you have any health conditions or lifestyle habits that may be considered high risk than the lowest rate on the quote engine may not be the lowest rate for you. Each company weighs risk differently so if you’re a tobacco chewer or a diabetic then the company that will give you the best rate will be different than that of a healthy individual. For this reason, it’s important to work with an independent life insurance agent/agency that has experience working with high risk cases.
Go with Term Life
Term life insurance is the most affordable life insurance coverage out there. This is due to the fact that the coverage does come with an expiration date so the risk of you dying is not as high as with permanent coverage. You also want to make sure to steer clear of term life insurance without the medical exam, as the premiums tend to be higher for a policy omitting the exam. If affordability is what you need, term will beat any permanent or no exam coverage every time.
Let’s bring back Billy again for another example. If we run quotes for Billy for $500,000 worth of coverage and compare different rates for term lengths this is what we would get.
- 10 year term – $18.14
- 20 year term – $29.53
- 30 year term – $46.22
- No Lapse Universal Life(to age 121) – $207.66
The difference is apparent and this doesn't include quotes for a whole life insurance product often offered by financial advisors, which can be 2 to 3 times more expensive than a No Lapse Universal Life Insurance policy.
Layering your term life insurance policies is also a good idea. If you’re kids college education will be paid off in 10 years and your mortgage in 30, you don't need to get a 30 year term policy to cover both. You can just get one 10 year term to cover college expenses and one 30 year term to cover the mortgage. This can add up to a lot of savings over the 20 to 30 year period.
If you have some money laying around you’re better off paying annually. While the savings aren’t large. It can still help you cut 3%-5% off of the annual premium. It’s not an enormous amount, but it will help further optimize your savings.
You actually do save money if you buy life insurance now. According to experts, it is highly likely that you will never be as young as you are at this moment. Also as you age you may acquire health complications, so it’s best to lock in low rates, at a good health rating and enjoy the long term savings of acting fast.
Say No to Expensive Riders
Riders are add on’s to life insurance policies that can drive up the costs. The most popular is the return of premium rider which returns all the premiums to your term policy at the end of the allotted term. While this option may sound appealing, it will double your monthly premium and you are better off either getting adequate coverage or investing the difference to protect it against inflation. While not all riders are bad, they will make the policy less affordable.
A good term life insurance product will come with certain riders at no extra charge. The most important of which is the option to convert or renew. These will allow you to renew your term policy or convert it to a permanent product at the expiration of the policy on a guaranteed basis. This means that no matter your current state of health, you will be guaranteed coverage, with the premium only being adjusted to fit your current age.
Ace the Medical Exam
To get the most affordable rates you will have to go with coverage that requires a medical exam. And in order to get the best possible health rating you will have to ace it. Normally a nurse will come out to your home a take your blood pressure, blood and urine samples. A good rule of thumb is to eat healthy a couple days prior to the exam and schedule it early in the morning before the coffee and donut, as this can knock your readings all out of whack. The difference in readings can cause you to fall a health rating below which can be as much as a 20%-50% increase in premium.
You should always be adequately insured, but not being able to afford what you need isn’t a good reason to put it off, after all insurance is risk protection. Make the necessary cuts, and get a coverage amount you can afford comfortably to continue having the coverage in place. If you want to compare quotes with no personal information required, head over to to InsureChance.com. We represent over 60 “A” rated life insurance companies and specialize in high risk cases. As you can see getting the right, affordable coverage can take a lot of work, let us do it for you.
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.