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How To Lower Your Life Insurance Premium

by | Jun 22, 2020


The average American household spends over $60,000 every yearThose costs include housing, education, vehicles, entertainment, and more. If you want to reduce them, you might consider reevaluating your life insurance.  Reevaluating your life insurance doesn’t mean getting rid of it altogether. Quite the contrary – you may be able to reduce your life insurance premiums while still holding onto a policy that may one day come in handy.

Keep reading for our top nine ways to reduce life insurance premiums and save a good deal of money every year.

1. Apply When You’re Younger

Life insurance is a lot less expensive to purchase when you’re young. That’s because life insurance companies believe (and rightly so) that you’re more at risk for various health conditions as you get older. That means you’ll pay higher premiums if you apply later in life, and much lower premiums while you’re young and still relatively healthy.

2. Get The Right Amount of Insurance

Understanding how insurance policies work is a daunting task. Not understanding insurance policies can lead to buying more insurance than you need. Having too much life insurance increases the cost of your premiums.  To correct this, figure out how much life insurance you need. Factor in any debts that would be owed with a sudden passing as well as future costs for things like your child’s college tuition. Then, subtract any liquid assets that could be sold if your family needed the cash value to give you a good idea of how much your policy should be worth.

You can apply the same principle to the length of your coverage. Reducing the term of your policy will ultimately reduce your costs. For example, if your mortgage is up in five years, you might not need ten years of coverage.

3. Stay Healthy

Nearly 40% of American adults are obese, and at least 69% are overweight. Being overweight or obese increases the risk of a number of medical conditions. They’re also related to higher mortality rates.

Insurance companies generally take into account a person’s overall health to determine premiums and coverage.  For instance, an insurance company might use the body mass index (BMI), which takes into account your height and weight to determine premiums.  In some cases, higher premiums may apply to those with a BMI that is higher than the normal range.

4. Quit Smoking

Smoking is the number one cause of preventable death in the US. Smokers are at a higher risk for heart disease, stroke, and several types of cancer. If you’re a smoker, your insurance premiums are likely to be at least twice as high as those for nonsmokers. Quitting may improve the cost of your premiums.

Some companies will consider you a nonsmoker with only one year quit, while others require more time. 

5. Avoid High-Risk Activities

Some hobbies are considered high-risk by insurance companies. These include scuba diving, rock climbing, sky diving, and others that have high accident rates. If you partake in these activities, you might pay higher life insurance premiums.  We’re not going to suggest you stop doing the things you love. But, if you don’t want to pay more to do those things, there are some ways around it.

Try finding statistics on accident rates regarding the activities you enjoy. If you can find statistics to back up your claim that you’re safe, you can put those in a letter to the insurance company. It’s possible that they reason with you and reduce your premiums, at least a bit.

6. Use Your Insurance to Pay Your Insurance

If you have a permanent life insurance policy wherein your premiums go toward a cash value, you might be able to use that to help you pay your premiums. That doesn’t precisely lower your premiums, but it does help you pay them in a time of need.  Remember, though, that using your cash value will reduce the death benefit. And if you use your entire cash value to pay your premiums, you’ll no longer have an insurance policy.

7. Reduce Your Coverage

If you’ve had your insurance policy for at least three years, your insurance company might allow you to decrease the face value. Less insurance coverage means lower premiums. But this is usually a one-time deal, so be sure it’s the right time. 

8. Look For Hidden Fees

Always read the fine print because there could be hidden fees. Often, insurance companies throw riders into your coverage that you might not need. You might be able to have these removed from your policy to help lower your premiums.

The most common riders include:

  • Disability income riders
  • Waiver of Premium Rider
  • Accidental Death Benefit
  • Term conversion rider
  • Accelerate death benefit rider

Also, check if your insurance companies charge you extra to pay every month. You might be able to switch to an annual payment for a lower cost.

9. Shop Around for the Best Life Insurance Premium

If you’re buying a car, you look around for quotes, and you compare costs. So why not do the same with insurance?  There are hundreds of insurance companies to choose from, all with their benefits and costs. Before you make your selection, shop around, and compare rates and terms. That ensures you get the best product for you, right from the beginning.

Compare Life Insurance Costs

Your life insurance premium isn’t a one size fits all. Your payment depends on your age, your health, and your life hobbies. But it can also be impacted by hidden fees and the company you decided to purchase through.

Your best bet for the lowest premiums is to get the right amount of coverage from the right provider for you. Start here when you’re ready to compare quotes and terms.

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