When it comes to purchasingВ life insurance, there are a number of policy choices available that can match your needs without hurting your pocketbook. Life insurance companies price their policies very competitively, so if you do your homework and keep your options open, finding a good deal on a life insurance policy shouldn’t be hard. Here are some common tips you can use to reap savings on life insurance.
Don’t purchase the wrong policy.В Choosing the right policy that fits your needs is more important than you might think. Term life insurance is generally the better bet for people who just want basic insurance protection because the premium is affordable.“Term insurance is initially the least expensive form of life insurance you can buy,” says Brian Ashe, CLU, and spokesperson for the Life Foundation. “A young family just starting out can get a lot of term insurance for a relatively low premium.”
But keep in mind, once your term expires you will likely need to look for a new policy. If you purchase a new term life insurance policy, the premium will go up based on your age and health status. For example, if you compare the cost of a term policy for a 20-year-old male to the cost of a male above age 50, the male over 50 could be paying three to five times more for a term life policy than his younger counterpart.
If you decide that term is the best policy for you, you might want to think about purchasing a policy with a “guaranteed renewal” or “annual renewable” term. This means that the policy automatically renews on its own and you won’t be required to take another medical exam. This can be helpful especially if you become ill or find yourself with a pre-existing medical condition during the duration of the term. Still, like most term policies, the premium price goes up every consecutive year during the life of the policy.
Also, consider Return of Premium (ROP) term life insurance. “You pay premiums for 20 or 30 years and if you don’t die by the end of the term your premiums will be refunded,” explains Al Lusty, Senior Vice President and Head of Business Development for ING. “The premiums cost more but in the long run, this type of policy can help you save money in addition to providing insurance protection for you and your family. Premiums can range from one to three times as high. ”
Ashe recommends that once young families are able to do so financially, they should convert all or a portion of their term life insurance policy to permanent life insurance. “If your need time horizon is generally longer than 15 to 20 years, permanent insurance looks very attractive from an economic standpoint,” he says. “You may also want to flip over to a universal life policy where you would have the opportunity to level out premiums and build cash values. ”
Another option to consider is a level-premium policy. These policies are available in terms and whole life. The premium is much higher at the start of the policy than a basic term policy, but the premium is locked in for 20 years. You may pay more for the policy in the beginning, but you won’t have to keep paying a higher premium each year as you age. В When you are older, you will see savings because with a traditional policy you would be paying far more in premiums В because of В your age and health status.
