There’s no getting around it: if you have dependents or others who depend on you financially, you need life insurance. And the more people who depend on you, the more you need! But don’t worry – it might not be as expensive as you think. There are several factors that can decrease the cost of life insurance.
Age is one of the biggest factors in procuring affordable life insurance. Younger individuals pose less statistical risk to insurers, so they are usually willing to insure younger individuals at a lower rate.
When you purchase a term life insurance policy, your rates are typically guaranteed through the duration of the policy. This means that the price you pay at the beginning of your policy will be the rate you continue to pay throughout the duration of your coverage. Because of this, it’s considered wise to try and purchase a policy as early in your life as possible.
Your 20s are your best time to purchase life insurance to get the most affordable options, but 30 and 40 year olds can get reasonable rates as well. Even though you can purchase life insurance into your 60s, the rates will only continue to increase as time marches on. Acting earlier enables you to lock in the lowest rate possible.
Your lifestyle can be another factor in your life insurance costs. Insurers feel more comfortable offering coverage to people they find less likely to cost them money, so making healthy choices and avoiding risk when possible can be a way to make life insurance more affordable.
The main things insurers consider as far as health include:
- Heavy drinking
In addition, high-risk hobbies can lead to more costly policies. Some examples of high-risk hobbies include:
- Rock climbing
- Hang gliding
As with hobbies, higher-risk occupations tend to be more expensive to insure. Some of the most expensive careers to insure include:
- Garbage collectors
Ultimately, it is up to you to decide what risks are worth taking. You may already have a risky career or even a risky hobby that either sustains your lifestyle or helps you lead a more fulfilling life. A risky job or hobby doesn’t necessarily mean you won’t be insurable; it might just cost you a little bit more.
3. TERM LIFE INSURANCE
Term life insurance provides coverage for a specific time frame, typically ranging from 10 to 30 years. This type of policy allows for a lot of flexibility with coverage amounts and the length of time you would like coverage. Additionally, this option allows you to match the amount of coverage you choose with the amount you foresee needing to cover your debts or what you want to leave behind for your family.
Term life is an excellent option for people who aren’t interested in building cash value in a life insurance policy – as you would with a whole life insurance. It is also relatively affordable up to very large amounts of coverage. While the specific rates depend on a number of factors, you could feasibly be insured for hundreds of thousands of dollars for less than $30 a month.
4. PAY ON TIME
Time is always ticking on the cost of your life insurance policy. The older you are at enrollment, the more expensive the coverage. If you miss payments, your policy can lapse, meaning you lose your coverage. Establishing a new policy would likely be more expensive because not only would you be older than when you initially purchased the coverage, but your health status may have changed.
While some insurers will work with you for short-term issues with non-payment, certainly don’t rely on that possibility. Be sure to make your life insurance payments on time to prevent costly consequences.
5. MINIMIZE EXTRA FEATURES
Another way to reduce the cost of life insurance is to consider how much life insurance you actually need. There are a number of formulas you can use to determine that value, from flat multiplication to a more complex analysis of your specific finances. Depending on your situation or your place in life, you may need to reevaluate your insurance needs to make sure you aren’t over- or under-purchasing.
There is no set “right” answer for coverage, but it can be helpful to speak with an insurance agent or financial advisor to determine your plans and goals. If you have questions about how to get enough life insurance coverage without breaking the bank or how to decrease the cost of life insurance, connect with Independent Insurance Associates. Give us a call today!