Get The Best Life Insurance Rate: Tips And Tricks

Life insurance is a vital financial tool for anyone who wants to protect their family, aid a favourite cause, or sustain a business after they die. However, it can be expensive, depending on your age, health, lifestyle choices, and the amount of coverage you need. Here are some tips to help you get the best life insurance rate:

- Shop around: Getting life insurance quotes from multiple insurers gives you a better chance of finding a cheap life insurance policy.

- Buy term life insurance: Term life insurance is usually the cheapest option, ideal if you only want coverage for a specific period, such as until your children finish college or you pay off your mortgage.

- Avoid unnecessary riders: Riders are policy add-ons that can increase your premium. Evaluate whether the potential premium increase is worth the additional coverage.

- Buy life insurance sooner: Life insurance premiums are typically lower when you are younger because insurers view younger policyholders as lower risk.

- Improve your health: Making certain health and lifestyle changes can lower your life insurance rates. For example, quitting tobacco can significantly reduce your premiums, and maintaining a healthy weight is also beneficial.

- Consider different policy types: Assess the various options, such as term life, whole life, and indexed universal life insurance, to find the best fit for your needs.

Compare rates from multiple carriers

Comparing rates from multiple carriers is a crucial step in securing the best life insurance rate. Here's a detailed and instructive guide on how to effectively approach this process:

Understand the Market and Your Options:

Firstly, it's important to recognize that the life insurance market is vast, with nearly 800 insurers in the US alone. This abundance of options empowers you to be selective and find the best fit for your needs.

Shop Around and Compare Quotes:

Don't settle for the first offer you come across. Instead, take the time to gather quotes from multiple insurers. Aim for at least three to five quotes to ensure you're getting a comprehensive view of the market. This approach will help you identify the most competitive rates and coverage options.

Assess Your Personal Circumstances:

Your age, health, lifestyle choices, and financial goals all play a significant role in determining your life insurance rates. Be mindful of these factors when comparing rates, as they can vary significantly from one insurer to another. For example, if you're a smoker, you may find that certain insurers offer more competitive rates for smokers than others.

Consider Online Tools and Brokers:

Take advantage of online comparison tools and brokers who can shop around on your behalf. These resources simplify the process of gathering quotes and can provide you with expert guidance tailored to your specific circumstances.

Look Beyond the Premium:

When comparing rates, don't solely focus on the premium amount. Examine the coverage, death benefit, and any additional features or riders offered. Evaluate the overall value of the policy, not just the price.

Understand Underwriting and Risk Factors:

Insurers use a process called underwriting to assess your risk factors, including your health, age, and lifestyle. These factors will influence your rates, so understanding how insurers evaluate these aspects is essential.

Seek Expert Advice:

If you're unsure where to start or feel overwhelmed by the options, consider consulting a licensed insurance agent or financial advisor. They can provide personalized guidance based on your unique circumstances and help you navigate the complexities of different policies.

Be Transparent and Accurate:

When providing information to insurers, be transparent and accurate, especially regarding your health and medical history. Any discrepancies or misrepresentations could lead to issues with your coverage or claims in the future.

Don't Be Afraid to Negotiate:

Remember that you are the customer, and it's your right to negotiate for better rates and coverage. If you feel that a particular insurer's rates are higher than others, don't hesitate to inquire about potential discounts or explore other options.

Review and Revisit Your Policy:

Life insurance is not a set-it-and-forget-it decision. As your life circumstances change, your insurance needs may also evolve. Periodically review your policy to ensure it remains aligned with your goals and financial situation.

Act Promptly:

Don't delay purchasing life insurance, especially if you've identified a need for coverage. The younger and healthier you are when you purchase a policy, the more favorable rates you're likely to secure.

Choose term life insurance

Term life insurance is a good option if you need coverage for a specific period of time, such as until your children are through college or until your mortgage is paid off. It's also a good option if you need a large amount of life insurance but have a limited budget. Term life insurance is generally the cheapest type of life insurance, and the rates are locked in for the length of the term. You can choose the length of the term, typically between 10 and 30 years, although some companies offer terms of up to 40 years.

When choosing a term life insurance policy, consider the following:

• The length of the term: Choose a term that covers the number of years you want to provide coverage for.
• The coverage amount: Consider your financial situation and budget when deciding on the coverage amount.
• The insurance company: Compare rates from multiple companies to find the best deal. Look for a company with strong financial stability and low customer complaints.
• Riders: Consider any riders or additional benefits you may want to add to your policy, such as an accelerated death benefit or a waiver of premium.
• Conversion option: Choose a term policy that can be converted to a permanent policy in the future if your financial needs change.
• No-exam option: If you're young and healthy, you may be able to skip the medical exam, which can speed up the application process.

Improve your health

Improving your health is one of the most effective ways to get the best life insurance rate. Here are some ways to do that:

Maintain a healthy weight: Keeping a healthy weight can reduce your risk of high blood pressure, high cholesterol, heart attack, stroke, diabetes, or heart disease. This will not only improve your overall health but also increase your chances of getting the lowest possible insurance rate. Eating a well-balanced diet and exercising daily can help you achieve and maintain a healthy weight.

Quit smoking: If you've smoked in the last 12 months, you'll be given a more expensive smoker's rate. Smoking is considered high risk due to its association with various health issues. Quitting smoking altogether is the best way to improve your health and get a lower insurance rate.

Moderate alcohol consumption: While reasonable consumption of alcohol won't affect your premiums, excessive drinking or drug abuse may result in higher rates. Stay within the recommended guidelines for alcohol consumption, and your wallet won't take a hit.

Engage in low-risk activities: Your hobbies and profession can also impact your rates. If you participate in high-risk activities like skydiving or have a hazardous job, you may be charged higher premiums. Opting for safer hobbies and maintaining a safety-conscious lifestyle can help offset these risks and potentially reduce your insurance costs.

Avoid dangerous activities

Dangerous activities can have a significant impact on your life insurance rates. Life insurance companies assess your risks when deciding whether to insure you and how much to charge. If you engage in high-risk activities, you could end up paying thousands more for life insurance, or the insurance company might even deny coverage altogether.

• Frequency and experience matter: The more often you engage in a dangerous activity, the higher your risk and life insurance rates. On the other hand, experience and qualifications can lower your risk. Training, qualifications, and certifications demonstrate a commitment to safety, which can help keep rates affordable.
• Health and medical history are crucial: Certain medical conditions, such as heart problems or respiratory issues, can increase the risk associated with dangerous activities. In some cases, serious medical conditions combined with risky hobbies may even lead to a decline of coverage.
• Understand ratings and exclusions: Insurance companies may apply a rating, which is an extra amount you pay per $1,000 of coverage per year. Alternatively, you may receive an exclusion, meaning you pay the same as the average person, but any death resulting from the dangerous activity will not be covered.
• Be honest on your application: It is essential to be open and truthful about your dangerous hobbies when applying for life insurance. If you die while engaging in a dangerous activity that you failed to disclose, the insurance company may deny the claim.
• Shop around for the best rates: Not all insurance companies treat high-risk activities the same way. By working with an experienced broker and comparing quotes from multiple companies, you can find the most favourable rates for your situation.

Some of the most common dangerous activities that life insurance companies scrutinize include:

• Aviation: Private pilots, including helicopter pilots and student pilots, often face higher life insurance rates or exclusions.
• Extreme sports: Activities such as skydiving, hang gliding, parasailing, and parachuting are considered high-risk due to the potential for accidents and equipment malfunction.
• Climbing and mountaineering: Climbing at indoor walls is generally safe, but outdoor rock, mountain, and ice/snow climbing can significantly increase your risk, especially at high altitudes.
• Racing: Car and motorcycle racing are considered dangerous due to the potential for collisions and mechanical failures. The type of vehicle, frequency of racing, and level of experience will all be considered.
• Scuba diving: While occasional recreational diving is usually not a concern, frequent deep-sea diving, solo diving, or hazardous diving (such as wreck, cave, or ice diving) can result in higher life insurance rates or exclusions.
• Snow sports: Activities like skiing, snowboarding, and snowshoeing can be dangerous, especially if done in unmarked areas or the backcountry. Avalanches are a significant concern for insurance companies.
• Travelling: Travelling to high-risk areas, especially those with travel advisories, can affect your life insurance rates. Insurers may also consider the purpose of your travel and your citizenship status.

Evaluate your employment benefits

If you're looking to get the best life insurance rate, it's worth evaluating your employment benefits. Many employers offer life insurance as part of their benefits package, which can be a convenient and cost-effective way to get coverage. Here are some things to consider when evaluating your employment benefits:

• Coverage amount: The amount of coverage provided by employer-provided life insurance can vary, but it is typically based on a multiple of your annual salary or linked to your position at the company. Basic employer-provided life insurance may not be sufficient for your needs, especially if you have dependents or financial obligations.
• Cost: Employer-provided life insurance is often free or offered at a low cost to employees. However, if you purchase supplemental life insurance through your employer, you may be responsible for paying the premiums.
• Portability: Group life insurance policies are often not portable, meaning you may not be able to take the policy with you if you leave your job. This is an important consideration if you plan to change jobs or retire in the future.
• Choice of insurer: Employers typically only work with one life insurance carrier, so you may have limited options when it comes to choosing a policy that meets your specific needs.
• Coverage for spouse and children: Employer-provided life insurance typically only covers the employee, not their spouse or children. If you want to ensure your family is protected, you may need to purchase additional coverage.
• Tax implications: If your employer-provided life insurance coverage exceeds a certain amount (typically $50,000), the excess amount may be considered imputed income and subject to taxation.

When evaluating your employment benefits, it's important to consider your personal circumstances, financial needs, and the specific terms of your employer-provided life insurance policy. While employer-provided life insurance can be a valuable benefit, it may not always be sufficient on its own. You may need to purchase additional coverage to ensure you and your family have adequate protection.

Frequently asked questions