Finding a life insurance policy that fits into your budget is easier than ever.
Life insurance is one of the best ways to find peace of mind in knowing that your family would be financially supported if you were to pass away. The money received by beneficiaries can help pay off any outstanding bills and debts, pay for final arrangements, and even act as an inheritance for your children. While the benefits are clear, if you have a tight budget, life insurance may feel like a luxury you cannot afford. But, if you shop around for the best rate possible and do a little bit of repositioning in your budget, you might be surprised at how affordable it can really be.
4 Tips To Find Affordable Life Insurance Rates
Finding an affordable rate will make it easier to fit your premium into your budget
The first step in finding a life insurance policy that can work within your budget is to find an affordable rate in the first place. There are plenty of ways that you can save money while still finding a policy that gives you the coverage you want.
1. Get Your Health In Order
Your health is one of the biggest determining factors when a life insurance company considers how much coverage you can get and how much you will have to pay for it. When you apply for a life insurance policy, you will be asked quite a few questions about your health, and you should do your best to provide as much information as possible.
Specifically, your height and weight can play a big part in determining your premiums. Your body mass index (BMI) can make the difference between your rate class, so, if you have a higher BMI, you’re likely to pay more. On top of that, things like your blood pressure and your cholesterol can do the same to your rates. Add in any smoking habits, and you can say goodbye to affordable rates. If you have started to notice some issues with these health vitals or if you are a smoker, you may want to get these in check before applying for a life insurance policy.
Let’s say that you need a life insurance policy sooner rather than later, but you don’t have the time to wait to work on your health. You might get locked into a higher premium rate at first, but there are still ways you can get a lower price. If you’ve quit smoking and have made major improvements to your health, you can always ask your life insurance policy carrier to re-evaluate your health to see if you can get a better rate. Normally, you have to provide some medical records to prove that you are not only in better health now, but you have also maintained better health for a certain period of time. If your carrier does not give you the opportunity for a rate re-evaluation, you can always shop around for a new policy. Chances are, you might find a policy elsewhere for a better price.
2. Find The Right Type Of Coverage
When trying to get a life insurance policy for the most affordable rate possible, the type of insurance you get will have a big impact on how much you pay monthly. The two most popular types of life insurance are term and permanent, but you’ll pay a vastly different amount for each.
Out of the top two, term life insurance tends to be the most affordable. This is because term life insurance is the most basic type of life insurance you can get, but that doesn’t mean it’s not a great way to get coverage. Term life insurance covers you for an agreed-upon period of time for a certain amount of coverage. If the policyholder were to die within that time, then their beneficiaries would receive the death benefit.
Nowadays, the internet has made it so much easier to find life insurance online. Whereas traditional approaches to life insurance policies require applicants to undergo a medical exam, you can now find great rates for life insurance without a medical exam through accelerated term life insurance. Not every company offers this type of insurance, but it has been popping up more and more in recent years. While you will still have to answer some questions about your medical history, you won’t need to take time out of your busy schedule to get a medical exam. Instead, companies use the information provided on your application and use algorithms to determine if they can approve you for coverage as well as how much you will pay for the coverage. All in all, it’s a much simpler and quicker process and you will still be able to get a great rate for the coverage you need.
Permanent life insurance, on the other hand, covers a policyholder for their entire life rather than a certain period of time. The death benefit also has some additional benefits as well. As the policyholder pays their premium, that money accumulates and translates into a cash value that can be used while the policyholder is still alive to borrow against. With this added benefit of guaranteed coverage over the course of life as well as the cash value, permanent life insurance can be very appealing until someone sees the price tag.
3. Ask About Discounts
You should always ask the carrier if they offer any types of discounts. In a lot of cases, there are ways that you can unlock even more savings.
The most common way that people receive discounts on life insurance is by paying their premium payments in full for, let’s say, a year. If this is something you are financially able to do, your provider may offer anywhere from a 2-8% discount. Before you get a life insurance policy, ask to see if your carrier provides any discounts such as this one. On top of that, some carriers will provide a certain discount if you have a certain job or profession. So, if you are in the military or are a teacher, there could be even more saving opportunities.
Now, another very popular way to save money on life insurance is to bundle it with other insurance you may need. Most commonly, people will bundle their life insurance with their home or auto insurance. Especially if you need these insurances, why pay a higher price to get your insurances separately when you can bundle and potentially save even more money?
4. Shop Around
The best way to get the most affordable life insurance rate possible is by doing your due diligence and shopping around. Luckily, the internet makes it so incredibly easy to get quotes from multiple providers, compare your offers, and pick the option that makes the most sense for you. Not all companies will give you the same rates for the same or similar coverage amounts, so it is always in your best interest to get a healthy amount of quotes to compare. It may be tempting to automatically select the policy with the lowest monthly premium price, but you should always weigh the coverage amount and the price so that you are getting the most for what you are paying.
How To Adjust Your Budget To Fit Life Insurance Costs
Now that you’ve found a great rate, it’s time to re-evaluate your budget and make any necessary adjustments
With an affordable life insurance policy rate locked in, now it’s time to see how it plays into your budget. By reviewing your current budget and making some adjustments, you will have a better understanding of what you need to change about your spending habits in order to afford your rates.
Review Your Budget
The first step in adjusting your budget to fit life insurance costs is to review your current budget. It’s good to do this from time to time anyway so you can make sure your budget still works for your needs.
When reviewing your budget, first start by comparing your planned spending and your actual spending habits. Using a budgeting app or going through your bank statements, you can get a better idea of where you are aligned with your planned spending and where you may be missing the mark in actuality.
With a better understanding of your spending habits in mind, you will next want to consider any new expenses. In the case of life insurance, you may want to test how your budget may change if you decide to pay your premiums in full for the year or if you decide to pay monthly.
Looking at the bigger picture, keep your financial goals at the top of your mind as well. This may impact how much you need to modify your spending habits if you find that you don’t have enough room in your budget to realistically achieve your goals.
Determine What You Can Cut In Your Budget
Now that you have a better idea of where you would like your money to go and how you have actually been spending, you can then start to modify your budget. If you have crunched the numbers and have determined that you can realistically fit your life insurance into your budget without needing to make any significant changes, then you may not need to modify your budget very much at all. Or, the solution may be to simply move planned spending budgets from category to category.
However, if you have noticed that your financial priorities have changed and you don’t have the wiggle room to accomplish what you need, then cutting back on your unnecessary spending is a great place to start making changes. While this will look different for everyone depending on their own habits, some popular ways to cut back are as follows:
- Cut back on going out to eat.
- Plan nights in rather than nights out.
- Audit your subscriptions and cut back where you can.
Even simple but consistent changes can add up and make room for your new financial priorities.
Life insurance policies are a great way to ensure that your family will always be financially supported, even if you were to pass away. With that in mind, know that life insurance isn’t a luxury that only a few can afford. With a little bit of research and some adjustments in your budget, a life insurance policy is well within reach.