As with anything else, a bit of extra care can really trim the dollars from our spending on life insurance without reducing the quality or amount of our insurance one iota.
Here are some ways to really tighten the screws on the life insurance ship.
Cutting Down Your Life Insurance Budget
1. Figure out whether you need life insurance at all
Do you have dependents that will require financial support after your passing? Do you have adequate resources and assets to cover funeral and burial expenses? The answers to these two questions should really point you as to whether or not you need any life insurance at all.
2. Know the amount you need
Use a thorough life insurance calculator to estimate exactly how much you need. Don’t rely on your own personal guesses or, perhaps even worse, the estimates of a salesman to tell you what you need. The life insurance resources are there for you to access – empower yourself and figure it out before buying.
4. Buy term life insurance
Many – if not most – companies and individuals that will attempt to sell you a life insurance policy will attempt to package some sort of subpar investment product along with it, with some name that usually involves the words “whole” and/or “universal.” Such policies almost always earn quite well – for the salesman that sells it to you, that is. If you are excited by the idea of earning money from your life insurance, buy a term policy and bank the savings in an investment of your own choosing, like a Roth IRA.
5. Shop around for quotes
Much as with anything else, you don’t have to buy from the first place that you talk to that quotes you a price. Get lots of quotes. Find the best deal before you buy. Note that this isn’t always the least expensive deal – I would consider a policy from “Ma and Pa’s Fly By Night Life Insurance Kump’ny” less reliable than policies from other sources. Stick with reliable, large firms with a long history.
6. Look for special programs available to you
Many workplaces and social/service organizations (like AAA or AARP, for starters) offer very strong rates on term life insurance. Look into what’s offered through your job and through any organizations you belong to for additional quotes (and they’re often strong quotes).
7. Evaluate your payment terms
As with many types of payment, you can save substantially if you choose to pay quarterly, semiannually, or annually instead of monthly. The savings often far exceeds what you can possibly earn in your own investing with that money, so there’s no question that you should jump on board to minimize your annual costs.
8. Improve your personal health
Many policies require a physical before they can give you an exact quote – and the better you do on a physical, the better your rates will be. This is yet another reason to get your weight and personal health under control. Eat better, and get a little exercise.
9. Ignore the life insurance salesmen
Insurance salesmen will almost always come after you with a great pitch about some insurance-related product different than the basic policy you want. Let them ramble, but remember that you’re not hearing about the large cut they take from selling you this policy. Ignore it – or, if you must, take the information and actually research it extensively on your own. Don’t let them sell you something you don’t need.
I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.
