Although interest rates have dropped slightly in the past months, the higher interest rates have created a situation where many people have looked to trim their expenses and life insurance is often one of those areas. It makes sense that people tend to focus on other financial priorities such as paying rent or mortgages, utilities, paying off student loans, vacations and saving for retirement. But it is never a good idea to avoid buying life insurance all together. This could put your loved ones in a terrible financial position if something were to happen to you.
One of the misnomers about life insurance is that it is expensive. Life insurance can actually be more affordable than you may think. Here are a couple of ways to make getting life insurance more affordable.
- Start with a smaller amount of coverage and increase it over time. Often people’s budgets limit the amount of insurance they can purchase, especially when they are younger and just starting out in their careers. It is important to know that you can always revisit your policy and change or increase the amount and type of coverage in the future. It is better to have some protection now versus none at all.
- Choose a term life insurance policy over permanent coverage. There are two main types of life insurance: term life insurance and permanent life insurance. Within these categories there many variations and options. Each type of life insurance provides a specific type of protection that satisfies different needs. It is even possible to mix them both to get the best of both worlds. Term Life Insurance is less expensive than permanent life insurance due to the fact that it only pays the benefit upon death within the stated term/period of time and it expires when the term is over (although it can be renewed or converted to permanent coverage). Term life insurance is very inexpensive at a young age (less than a dollar a day). Permanent Life Insurance is life insurance that does not expire. This means your coverage is in place for life and is guaranteed to pay out at some point in the future, as long as your premiums are paid. Permanent life insurance also has a cash-value component that term life insurance does not. Due to the simple fact that permanent insurance will pay out at some point, it is more expensive than term life insurance.
- Buy sooner than later. It is best to buy life insurance when you are young and healthy. Insurance premium rates increase with an increase in age (the younger you are the more affordable the cost). Also, things could change in your health at any time and make you ineligible to purchase life insurance in the future. It is a good idea to buy life insurance sooner than later to lock in your rates when they are low.
- Source out quotes from several insurance carriers. An insurance advisor or broker can do this for you by gathering quotes for products that best suit your needs and budget. They can help ensure you get the appropriate coverage at a good price.
- Look for opportunities for premium discounts. Some insurers offer premium discounts for certain types of coverage or coverage levels. There is an insurance company that currently offers a program that provides rewards for participating in education, fitness and prevention activities. By being active, eating well, reducing alcohol intake, quitting smoking or getting a flu shot you earn vitality points. The more points you earn the greater your potential savings on your insurance premiums.
- Look into group coverage from your employer. Many workplaces offer group benefits and often life insurance is a part of these benefits. It is often subsidized in part by the employer and many times you can get a certain level of coverage without taking a medical exam. Although these things seem appealing, one thing to be aware of with a group life insurance policy is that this coverage terminates if your job does or at a certain age (eg. age 70 or retirement). So, it helps to also have an individual life insurance policy that you own.
Please don’t avoid buying life insurance because you think it will cost too much. Purchasing life insurance can be very affordable. Avoiding it could cost your loved ones significant financial hardship and stress. Speak to a licensed insurance advisor today about your options and protect the ones you love.