You can protect your family without overspending
7 Ways to Save on Life Insurance
by Vernon Williams
What Is the Best Type of Life Insurance for New Parents?
How to Get the Best Life Insurance
Calculating How Much Life Insurance You Need
1. Don't buy life insurance if you don't need it.
The purpose of life insurance is to replace your income if you die before accumulating sufficient assets to make life insurance unnecessary. So, if you have someone depending on you to earn a certain amount of income during a period of time, life insurance is the way to go. On the other hand, if you are single with no dependents or retired and living on investments or retirement income, you probably do not need life insurance.
2. Buy cheap term life insurance.
There are two kinds of policies: Term and whole life (or permanent or cash value). Term is pure insurance for a set number of years, 10, 15, 20, or 30 and it only pays a death benefit. Whole life, on the other hand, may provide interest and dividends. Since there are no dividends or interest involved, term insurance is generally less expensive than whole life.
3. Get low cost group insurance through your employer.
Some employers offer free life insurance as an employee benefit. In some cases, the employer may offer a designated amount free and the employee has the option of purchasing additional coverage. Since this is group coverage, the premiums are usually real low and it's a good deal for the employee.
4. Check your credit score before applying.
If there are problems, clear them up before applying for insurance. Otherwise, you could wind up either being denied coverage or charged a higher premium.
5. Quit smoking.
In addition to saving $1800 per year (a pack per day at $5/pack x 365 days), you will also save on life insurance premiums. Most companies charge twice as much to insure a smoker as they do a nonsmoker.
Calculator: How much life insurance do I need?
6. Make fewer premium payments.
The fewer premium payments you make in a year, the lower your annual premium. Some companies add as much as 20% to the annual premium if you make monthly payments. You can reduce the total premium by paying quarterly, semiannually or annually.
7. Get free life insurance quotes.
There are over 1500 life insurance companies. Premiums vary by hundreds of dollars for the same amount of coverage. For example, for $100,000 worth of term life insurance for a 35-year-old male, I recently found annual premiums that ranged from $886 to $2194.
With over 20 years of experience as a personal financial educator and counselor, Vernon Williams has developed in depth knowledge of what it takes to achieve financial success. Today, he is a sought after trainer and speaker by organizations from both the public and private sector. He is the author of 425 Ways to Stretch Your $$$$ and 3 Rules that Guarantee Financial Success. Visit Vernon at VernonLWilliams.com.
Take the Next Step:
- Read this before you buy life insurance. Here's what you need to know in order to make the best decision.
- Get answers to your other life insurance questions by visiting the Dollar Stretcher library.
- Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!
Share your thoughts about this article with the editor.
Debt from my past is preventing me from saving for my future! Tell us: Yes, debt is hindering my ability to save and I could use help dealing with it! or No, debt is not a problem but I am trying to get ahead financially!
More Money Tips & Tools
- 5 low-risk ways to earn higher interest now
- 10 easy ways to save money for the holidays
- 7 IRA withdrawals that don't trigger a penalty
- 4 secrets to maximize your credit card rewards
- Don't toss your financial resolutions just yet!
- How and why to put your legal and financial affairs on autopilot
- 18 ways money slips through your fingers
- This week's Readers' Tips