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8 strategies to lower the cost of your life insurance policy

Safeguarding Your Money
Life insurance is an important part of your financial plan, and the price of a policy doesn't have to strain your budget. Getty Images

When it comes to insurance coverage, you're likely aware of the importance of having the right car, home and health insurance policies. After all, that type of coverage is what protects you financially if you have a health emergency or chronic illness, are involved in an accident on the road or have an incident occur in your home. Otherwise, you'd be stuck paying out of pocket for the high costs associated with these types of problems.

But what may not always come to mind is the importance of a life insurance policy. This type of coverage — whether it's term life insurance or whole life insurance — should be top of mind for most people, though. After all, the right life insurance policy is a vital financial tool — one that provides peace of mind and financial security for your loved ones in the event of your untimely passing. 

And, while it's essential to have adequate life insurance coverage, it also comes as an added cost. As such, it's also essential to ensure you're not paying more than you need to for your policy. Luckily, there are a few ways you can lower the cost of your life insurance policy without sacrificing the protection it offers. 

Get started with a life insurance estimate here.

8 strategies to lower the cost of your life insurance policy

If you want to keep the cost of your life insurance policy in check, the following strategies may help:

Shop around and compare quotes

It may seem simple, but one of the most effective ways to reduce the cost of your life insurance policy is to shop around and compare quotes from different life insurance providers. Prices can vary significantly from one company to another, even for the same coverage, so it often pays to do your homework. Online comparison tools and insurance brokers can help simplify this process, ensuring you find the best deal for your needs.

Find out how much you could pay for a life insurance policy here.

Choose the right type of policy

Life insurance comes in various forms, with term life and whole life insurance being the most common. Term life insurance is generally more affordable than whole life insurance because it provides coverage for a set term (for example, 10, 20, or 30 years) and doesn't accumulate cash value. And, if your primary goal is to protect your family during your working years, a term policy might be the most cost-effective choice.

Determine the appropriate coverage amount

The amount of coverage you need can also significantly impact the cost of your policy. Avoid over-insuring yourself. Calculate the amount your family would require to cover immediate expenses, outstanding debts and future financial needs — and use that as a guideline for the coverage amount for your policy instead. By accurately assessing your needs, you can lower your coverage amount and reduce your premiums while ensuring that your family is taken care of, should the worst-case scenario occur.

Maintain a healthy lifestyle

Your health and lifestyle choices also play a significant role in determining your life insurance premiums. Insurers often require a medical examination before issuing a policy, and the results can influence your premium rates. By maintaining a healthy lifestyle, including regular exercise, a balanced diet and avoiding tobacco products, you may qualify for lower rates.

Bundle insurance policies

Many insurance companies offer discounts to customers who bundle multiple policies, such as home and auto insurance, with their life insurance. Combining policies with one insurer can result in significant cost savings, so it may benefit you to inquire about this option when searching for a policy.

Pay annually

Most insurance providers offer different payment options for your premiums. While monthly payments may be more convenient, they often come with higher administrative fees that can increase the cost of your policy. By paying your premiums annually instead, you may be able to save on these extra costs and potentially reduce your overall policy expenses.

Consider a laddering approach

Rather than purchasing a single large life insurance policy, it may be smart to consider a laddering approach instead. This approach involves buying multiple policies with different term lengths and coverage amounts to align with your evolving financial needs. It can be a more cost-effective way to provide coverage during different life stages while keeping consistent coverage just in case.

Review and update your policy regularly

Life circumstances change over time. As you pay off debts, accumulate savings or experience other life changes, you may find that you need less coverage. Regularly reviewing and updating your policy can help you avoid overpaying for coverage you no longer require.

The bottom line

Lowering the cost of your life insurance policy doesn't mean cutting corners on the protection it provides. Instead, it involves making informed decisions, shopping smartly and adapting to your changing needs. By following these strategies, you may be better positioned to secure affordable life insurance while safeguarding your family's financial future. But as with any type of insurance, just be sure that the policy you choose aligns with your unique circumstances and objectives so you can get the most out of it.

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