31. Save $100s per month – Save money on life insurance – get the barest amount of insurance you need
This article describes ways for you to save money on life insurance.
Get the barest amount of insurance you need. There are lots of recommendations on the list for various types of insurance, but don’t buy any of them if you don’t absolutely need them. That means no life insurance if you don’t have a kid or share a mortgage with someone. Even if you do, get the smallest policy possible–that money is supposed to keep them afloat if you die young, not pay for their Caribbean vacations.
Tap your life insurance - If you have whole life (a type of insurance you buy to last your "whole" life and your heirs get the payout even if you live to 104), you pay higher premiums, but the insurance has a "cash value" that you can tap any time. All you have to do is call your life insurance company to access the money.
Requote/renegotiate insurance: your insurance company will not usually tell you when your premiums can be lowered, but not one of them ever minds if you periodically (every-other year or so) ask them to re-quote your business. And yes, all property/casualty insurance companies offer discounts for home/auto/etc. packages. A clean driving record and not too many claims helps tons!
Are you paying too much for your life insurance?
We're living longer. As a result the cost of insuring the unthinkable is getting cheaper all the time. If you were sold a policy when you took out or mortgage you may have been under too much stress to shop around. You could be missing a trick.
Optimize Your Life Insurance - Average Savings: $110 per month
Life-insurance premiums have dropped so dramatically since the 1990s, it will probably pay for you to replace a policy bought years ago with a comparable one. A $500,000, 20-year guaranteed level term policy from Prudential, for example, would have cost a healthy, nonsmoking, 50-year-old man about $2,125 a year in 1998, according to Accuquote.com. Today the same guy, now 60, could pay Prudential $1,385 a year for the same coverage over the next 10 years. Savings: $60 per month.
Another option at any age: Adopt a healthier lifestyle and get re-rated for a lower premium. For example, a 40-year-old man with a $1 million, 20-year term policy could save $50 a month by cutting his cholesterol by 30 points; $65 a month if he dropped 50 pounds to reach normal weight; and $165 a month three years after he quit smoking.
Buy term life insurance. Any other life insurance product is just not worth the extra cost. A $500,000 term insurance policy only costs several $100s per month, then cash in on the life insurance policy and pay down expensive debt with it (like credit cards, personal/car loans, mortgage).
How to Do It
Get a physical checkup and follow your doctor's advice for shaping up before applying for a new policy. You can get premium quotes at LifeInsure.com. Don't cancel your existing policy until you have a new one already in place.
My story: I was sold 2 whole life policies (yes 2!!!)….after much research I surrendered both of them after 4 years and took the cash value. For my current situation, term or no life insurance makes the most sense as I don’t have any dependents. Savings: $50/mo plus one time cash value of the surrendered whole life policies.
Don't buy credit life. These are gimmick policies that are basically life insurance that's tied to specific debts, like a credit card or mortgage. Regular term life insurance is a much less expensive alternative (see above).
Don't buy whole life insurance. Whole life, or permanent life insurance, combines a life insurance policy with an investment account. Unless you're rich and need a permanent policy to help pay estate taxes, its generally a better idea to buy cheaper term coverage and do your own investing separately.
If you want to buy a whole life, universal life, or other cash value policy, plan to hold it for at least 15 years. Canceling these policies after only a few years can more than double your life insurance costs.
Don't insure your child's life. The purpose of life insurance is to replace the earnings of a key breadwinner in the event of untimely death. While the death of a child is certainly a tragedy, its rarely a financial calamity. There are better investments you can make for a child.
Shop your coverage. Whatever type of insurance you have, you should shop it every six months. This is a competitive business, and getting more so all the time. So pull out those policies and make sure you're getting the best deal! Check out insweb.com
Don't buy specialty insurance, like cancer coverage. Put your money into a good general health insurance policy instead.
If you're changing policies, make sure your new one is in effect before you drop your old one. This applies to every kind of coverage: health, life, homeowners and automotive.
