Saving on Term Life Insurance
Rates for Term Life insurance remain at all-time lows, and now is the a great time to lock in on these rates. Here are some tips to help you save:
- Buy when you are young. Many people may feel they don’t need life insurance when they are young. While your financial needs may not be as great at a younger age, the rates will be substantially cheaper when you are young. Remember, the goal is to cover your primary assets (like your salary and house) so that if something were to happen to you, your beneficiaries would be able to persevere financially. The best advice is to lock in as much protection at a young age while your health and prices are still good.
- Renew close to your birthdayYour "half-birthday" could be costly. While some companies raise their prices based on your actual age, most companies increase the price of their policies six months before your birthday. It’s a term called "Age Nearest" in the insurance industry, and that half-year price increase could really add up over a 20-year term life policy.
- Buy when you are still in good health-- before any major health issues arise. Healthy people have the best mortality risks and thus are much cheaper to insure. Good health and low risks translate into lower insurance rates for the "Super Preferred" customer than someone with higher risk factors such as a heart condition, cancer or diabetes. If you happened to have purchased your policy when you were unhealthy and your condition has improved, you should shop for a new policy and compare the rates--you'll most likely find they will be much more affordable.
- Check for price breaks Companies often offer "price breaks" at certain coverage amounts (for example, $250,000 vs. $225,000). The truth is that many people can actually pay less money for more coverage. Check how little your prices increase when you increase coverage to $250,000, $500,000, or $1,000,000.
- Buy the right amount of coverage. Many insurance agents may try to sell you more coverage than you need. The purpose of life insurance is to replace your income in the event of a tragedy. Independent financial planners recommend the following rule of thumb: purchase an amount of coverage equal to 8-12 times your annual gross income.
Other frequently asked questions
- How are term life insurance rates (premiums) calculated?
- How much term life insurance do I need?