Life insurance can represent a significant personal or household expense, depending on the type of coverage selected. That said, there are a few things you can do, so that your annual premium is not as high as expected. Here are 7 ways to save on your life insurance premium.
1. Purchase your policy as early as possible
The younger you are when you purchase insurance, the less it will cost you per month. That’s because the older you are when you purchase insurance, the higher your premium will be, since the risk of death increases with age.
2. Don’t smoke
Smoking reduces your life expectancy. Smokers have a higher risk of death than non-smokers. For that reason, smokers have to pay a higher premium. The difference between the two can be very significant. In some cases, a smoker can pay more than twice as much as a non-smoker for the same insurance. However, you should let your insurer know if you used to smoke and quit more than 12 months ago. You might see a drop in your premium!
3. Choose term life insurance
If your needs are already well defined and they will be for a specific period, you should consider term life insurance. This option offers time-limited coverage, which means that you will be covered for a set period (e.g. 10, 20 or 30 years). The premiums start out on the low end but increase when the contract is renewed.
4. Bundle all your contracts
If you and your partner need life insurance, it’s better to get a couple’s contract than two separate ones. The same principle applies if you want to purchase life insurance for your children. You’ll save on policy fees. This principle also applies if you have more than one insurance policy to cover financial obligations such as your mortgage, credit card, line of credit, car loan or rental or other loans. It would be well worth it for you to meet with a financial security advisor to discuss the possibility of bundling your term coverages under a single contract.
5. Use the annual payment method
Pay your premium, if possible, rather than spreading it out in monthly instalments. That way, you’ll avoid having to pay additional administrative fees. The savings can add up to the equivalent of a monthly premium.
6. Be an existing client
If you purchase an insurance product such as home or auto insurance or even a financial product like an RRSP or a TFSA or mortgage loan, etc. from the company that issued your life insurance, you could get a refund on some or all of your first year’s premium.
7. Deal with a financial security advisor
You can rely on a financial security advisor to guide you through the wide range of coverage options available on the market. The advisor will analyze your financial situation, taking into account any insurance coverage you may already have through your employer, as well as your assets and needs, to ensure that your lifestyle and that of your family members is protected in the event that something unexpected occurs. The advice you receive can help you select insurance coverage that’s right for your situation, at the lowest possible cost.
Even though you now know how to save on your premium, it’s important to know how much you might have to pay for your coverage, based on your needs. To avoid unpleasant surprises, a financial security advisor is the ideal person to guide you in making a wise choice for yourself and your family.