As with all other things we buy, we are always on the lookout to get the cheapest possible price and life insurance is no different to anything else in this regard. Competition is part of our commercial environment and as a result there is always somebody who is going to offer you something at a lower price than another. However, like everything else, you have to take into account the quality of the product you are buying when making comparisons. Life insurance is not the same as buying a car or house and it can’t be seen in that way because what you are buying is a promise. A promise that if you are willing to pay the life insurance company a certain premium they, in return will pay out a substantial sum of money to your beneficiaries when you die.
When you pay money for a promise, you are putting a lot of trust in the organisation to honour that promise when the time comes for them to pay. Of course, the promise is enforced by various laws that protect you in this regard, but you still have to be aware that with so many online life insurance companies competing for your business there is a greater risk of you getting caught up in an offer too good to be true. For this reason you must always do your research and find out exactly what kind of company it is before you start paying your premiums to just any life insurance company.
As far as saving money on life insurance you have two basic choices to start with. One of these is term life insurance and the other is whole life insurance. All other policies on the market have one or other of these two policies as its base policy:
Term Life Insurance
Often referred to as ‘pure insurance,’ term life insurance is the cheapest type of life insurance cover you can buy in regard to the cost of your premium payments alone. You buy term life insurance for a specific period of time, it could be two years, five years, 10 years, right up to 30 years. If you survive the term you have chosen, all the premiums you have paid will be forfeited to the life insurance company, much the same way as your general insurance on your home or car. If you happened to die during the period of time you were covered, the life insurance company will pay the amount your life was insured for to the beneficiaries named in your policy.
Whole Life Insurance
As its name indicates, whole life insurance is taken out for the whole of your life. At some stage the life insurance company has to pay you up, whether that is when you die, or when you surrender the policy at some point in the future. Whole life insurance is more expensive than term life insurance but you are guaranteed money back. After the policy has been in-force for 10 or 12 years you will get most, if not all, your premium money back if you decide to surrender it. This of course makes whole life insurance much cheaper than term insurance no matter what the premium cost.
Lifestyle Changes Can Lower Premium Costs
The premiums to be paid on both either type of life insurance are cheaper, the younger you are when you take out the policy. Other ways to lower the premium price is to keep yourself fit and live a healthy lifestyle. An overweight applicant will be required to pay a higher premium than a person considered to be the correct weight for his or her height. This is because the life insurance company considers an overweight person has a greater risk of dying earlier than a person of a more moderate weight. On a whole life policy for example the lighter person would be expected pay premiums over a longer period than an obese person. Likewise, they therefore consider the obese person more likely to die within a certain number of years when calculating the risk when taking out term insurance.
Giving up smoking is another good way to avoid having to pay extra on the normal premium costs for both types of life insurance. It is best if you give up smoking at least 12 months before applying for cover. This is because it has been found that smoking does shorten your life expectancy rate, and this can cost the life insurance company money. Lower their risk and you will be rewarded with a lower premium cost. The same applies to heavy drinking of alcohol and the taking of drugs. All risky lifestyle habits that lower your life expectancy rate and increase the risk of you dying earlier than people who don’t follow the same damaging lifestyle habits.
Employment is another area that can affect the cost of your life insurance cover. If you are involved in what the life insurance company regards as a risky occupation you will most likely have to pay a loading on your premium before you will be accepted. Fishermen, mine workers, people working on oil rigs are all examples of the types of work most insurance companies would regard as carrying an extra risk. For that perceived risk they will require you to pay extra. This can only be avoided if you change occupations. If this is not an option you will have no other choice than to accept the loading.
Alban loves saving money and blogging about it. When he is not writing, he offers saving tips at Savings Account Finder.