Reduce life insurance premium

7 Helpful Tips to Reduce Your Life Insurance Premium

Life insurance is one of the most important components of our financial planning. While it’s important to have life insurance coverage, most individuals don’t buy it due to a high insurance premium.

High insurance premiums can negatively affect your decision of buying a life insurance plan. If you can find different ways to lower your life insurance premiums, you can buy life insurance without burning a hole in your pocket.

Here are 7 tips that will help you bring down the premiums without affecting your budget:

  1. Go For Term Life Insurance

When it comes to buying a life insurance plan, there is nothing better than term insurance. It is one of the oldest forms of life insurance that most individuals can afford. It will help you save a significant amount of money on premiums.

  1. Enroll In A Plan Now

Insurance experts advise buying a life insurance plan as soon as you start earning enough to pay for the premium. As a younger age implies lesser risks, experts recommend buying life insurance as early as possible. It attracts a lower premium. This is why buying a plan at an early age is one of the best ways to save money on the premiums.

The older you get, the costlier the insurance premiums are going to be. Any delay in buying a life insurance plan can easily cost you an extra amount of money.

  1. Determine The Duration Of Your Policy

Most people tend to select a term plan with the longest duration possible. However, that’s not always the right approach. The right thing to do is buying life cover till the time you intend to earn.

It’s important for you to be protected while you’re earning. Following this approach will also ensure that you don’t shell out too much money while paying the premiums. After all, you are going to need this money post your retirement – when don’t have a regular source of income.

  1. Buy Life Insurance Online

Buying life insurance online is always a better deal as compared to the offline mode. Owing to the elimination of the agent’s commission and other administrative costs, the price of online insurance policies is a less expensive affair. Hence, it helps you buy a life insurance plan at an affordable premium.

  1. Compare and Buy

As with any other product, for a life insurance policy, you need to shop around if you are looking forward to grabbing the best deal. These days, most of the insurance companies make their policy quotes available online.

There are many insurance aggregators that offers insurance plans at a competitive insurance premium. You can visit their website and compare different policies in a matter of a few clicks. Just make sure that you compare policies with a similar set of coverage, tenure terms & conditions etc. to get the best results. While you might find one insurance company offering a policy at a lower premium rate for the same coverage, it may have certain exclusions that could make it different from the other one.

  1. Look for hidden fees

Make sure to check for hidden fees before finalizing a policy. There can be some cases where the insurer might charge extra if you opt for monthly premium-payment mode rather than annual mode. Also, insurance providers offer add-ons (also known as riders) with their plans for additional coverage. These are optional and not all insurance buyers need them. Opt for add-ons only if the basic insurance coverage doesn’t fulfill your insurance expectations.

Listed below are a few add-on riders:

  • Accidental Death Benefit Rider

If the policyholder passes away due to an accident, the payout given to her/his nominee is increased (mostly doubled).

  • Waiver of Premium Rider

If a policyholder becomes permanently disabled after an accident, the rider will waive her/his future premiums.

  • Disability Income Rider

Under this rider, the policyholder is provided a fixed amount as a source of income in case s/he becomes disabled.

  • Term Conversion Rider

This rider comes handy when a policyholder wants to convert her/his term policy into a whole or universal life policy.

  • Accelerated Death Benefit Rider

This rider provides cash advance to the policyholder against the DB (death benefit) in case s/he develops/contracts a terminal illness.

In short, these riders are similar to the “extras” that you get from car dealerships. If the basic insurance coverage fulfills your insurance expectations, you don’t need to avail them.

  1. Pay on the Premium time

It is important for you to pay the premium on time. In case you don’t, late fee charges may be added to your policy which will increase your insurance expenses.

Another reason why you ought to be punctual while paying your premiums is to avoid getting a defaulter tag in your payment records. It can easily ruin your financial standing or credit score while applying for a policy in the future.

Bonus Tip: Be Healthy

An individual with a healthy lifestyle will always get life insurance at an affordable premium. You can start by keeping a track of your smoking habits and alcohol consumption as they are considered high-risk factors by insurance providers.

Also, try to follow a healthy lifestyle to keep lifestyle diseases such as blood pressure, hypertension, and diabetes at bay. They, too, end up enhancing the premium amount.

Wrapping it up

The aforementioned tips will help you get an insight on how life insurance premium works and how to save a sizeable amount of money on your insurance. With the help of proper planning, buying life insurance plan won’t burn a hole in your pocket. Getting the right information and following the right approach can help you save thousands on the premium costs.