Your life insurance premium is generally determined primarily by three factors:
- Family Medical History
Though two of the three main factors affecting your life insurance premium (age and family medical history) are beyond your control, there are steps you can take regarding that third factor – lifestyle. There are some other ways to reduce your premiums as well and give your budget a break.
Lifestyle Changes That Can Lower Your Life Insurance Premium
Laying down the cancer sticks.
Non-smokers generally live longer, meaning the life insurance company will have more years to collect your premium payments before coughing up the death benefit for your beneficiary.
Dropping some pounds.
Weight loss often means lower cholesterol levels, lower blood pressure, and lower risk of developing chronic diseases like diabetes. All of these improvements to your health can make you a better insurance risk. Sweet!
Insurance companies can jack up your premium if you have multiple moving violations. Those speeding tickets can come back to haunt more than just your car insurance premiums.
Cutting back on the booze.
Alcohol consumption can pose a potential health risk. Drinking less alcohol – or stopping entirely – lessens the risk for the company and you’ll likely be rewarded with a lower premium. Life insurance companies will probably check not only your application, but your driving record, and your medical records to get an idea of your drinking habits.
Other Ways To Reduce Your Life Insurance Premium
You may be able to get similar or better coverage for less money. Companies like AccuQuote can shop multiple insurers for you to get the best possible price.
Switch from permanent to term life insurance
Depending on your age and how long you expect to need life insurance coverage, you may want to consider switching to a term policy, but NEVER, EVER cancel an existing policy until your new policy is in effect. NEVER NEVER NEVER.
Don’t let riders drive up your premium
Riders are optional policy provisions that pay additional money to your beneficiaries. Types of riders include:
- accidental benefit rider – pays your beneficiaries if your death was the result of an accident
- children’s term life insurance rider – pays if a child covered under your life insurance policy dies
- waiver of premium rider – pays your policy premium if you become permanently and totally disabled
- living benefits rider – pays a portion of your death benefit payment in advance if you are diagnosed with a terminal illness or if you require long-term care or nursing-home services
- payor rider – waives premiums if you die or become disabled before a covered dependent child reaches a certain age.
Inquire about “no-load” or “low-load” policies
These life insurance policies are often less expensive because agents are paid a flat fee rather than a steep commission.
Pay annually rather than monthly.
You may get a discount for paying your bill in full (annually) rather than paying monthly – and yes, that’s a big bill to pay at once. Some insurers may also give a discount for having your payment automatically withdrawn from your checking account.
Review your credit report.
Life insurance companies regularly review your credit report when calculating your premium. Paying your bills on time (which could even be noted on your report) assures the company that you are likely to pay your premium on time and in full.
Choose a company that has experience covering people with your condition.
If you have a certain medical condition, a broker can help find a company that is likely to work with you and may provide a better rate class.
Review your Medical Information Bureau file.
Insurers share information with each other on applicants’ medical conditions through the Medical Information Bureau (MIB). You can request a free copy of your file from the MIB’s website. Then review it for incorrect information that could negatively affect your premium.
Take the time to educate yourself about your life insurance options. A good insurance broker can help walk you through the process and find the policy that provides the coverage you need at a price you can afford.
Photo by Nathan Eal Photography