Life insurance provides a financial safety net for your loved ones and those who depend on you. With the right insurance coverage, you can secure yourself beneficiaries can cover your final funeral costs and replace any income they depend on.
While you buy adequate life insurance is essential, you should not pay more than necessary. But how do you even know if you’re overpaying for life insurance?
The two most popular forms of life insurance are whole and term. But on price varies widely for each, meaning you may be paying more than you really should.
If you want to compare what you are currently paying with what you can secure elsewhere, then start by getting a free quote from Haven Life.
Are you paying more for life insurance?
Here are four signs you may be overpaying for life insurance.
1. You haven’t searched for suppliers
If you signed up for your life insurance policy without comparing your premiums with other offers for similar coverage, there’s a good chance you’re pays too much for your policy. Insurance premiums vary between life insurance providers, so it makes sense to get quotes from multiple insurers to find the lowest premiums.
While submitting your information to multiple life insurance companies may seem like a pain, the process is relatively simple. Many insurers provide online quotes when you provide basic information about yourself and the type of coverage you need. You can also use an online comparison site and get multiple quotes within minutes.
Get started by getting a free estimate now or use the table below to start shopping for suppliers.
2. You have a whole life insurance plan
A whole life insurance plan may be a good option if it fits your goals and budget, but may not be ideal for everyone. Whole life insurance comes with a cash value account that grows tax-deferred over time and that you can borrow against. This advantage comes at a price, however, as whole life insurance can cost five to 15 times more than a term life insurance politics.
The growth rates of your cash value investment are usually lower than what you can find with other types of investments. In such a case, it may be better to get basic term life and invest the difference in savings elsewhere. Get a free term life insurance quote now to see what you qualify for.
3. Your policy has too many riders
Life insurers are optional add-ons that you can choose to customize your policy. While riders can help you tailor your coverage to your unique circumstances, they can also significantly increase your premium costs.
For example, you might think twice about carrying a death and dismemberment (AD&D) rider, which pays a higher death benefit if you die in an accident or suffer a serious injury such as the loss of a limb or paralysis. Insurers have different rules about what constitutes accidental death, and most deaths are not due to accidents. So while this rider increases the cost of your life insurance policy, your chances of receiving the increased death benefit may be slim.
4. You have a renewable annual life policy
Annual renewable term life policies start with a low premium, but they increase as you renew each year. So what was once an affordable premium can become very expensive over time. If your premium goes up every year, it might be time to shop around for a new policy or talk to your agent about changing your current one.
Instead of paying premiums that are adjusted higher annually, consider purchasing a level life policy. You’ll enjoy premiums that stay the same throughout the policy term, which should save you money.
How to lower your life insurance costs
The following tips can help you pay less for your life insurance policy.
- Buy your policy when you are younger. The cost of life insurance tends to go up as you get older and more vulnerable to health problems. One money-saving strategy is to buy life insurance when you are younger to lock in a low rate for up to 30 years or for life with permanent cover.
- Review your policy regularly. Your insurance should change over time, so your policy should be adjusted as needed. For example, you may not need to carry as much insurance when your children move out and establish their own incomes. Review your coverage annually to make sure you’re not paying for coverage you no longer need.
- Get only the coverage you need. Review your policy to make sure you are not overinsured. For example, some financial experts recommend a cover amount of 20 to 30 times your annual salary. However, if you have no family or beneficiaries who rely on your income, a lower death benefit amount may be sufficient.
- Ask about policy discounts. Your life insurance provider probably offers several discounts which can lower your monthly premiums. For example, you can get lower rates for bundling multiple insurance policies with your carrier or paying your annual premiums in advance.
The bottom row
The best way to make sure you don’t overpay for life insurance is to shop around and compare life insurance quotes from multiple insurers. Before starting the process, write down the parameters you want for your policy, esp policy type and the amount of coverage. This way, you can compare the same policy with multiple insurers to find the best price for the coverage you need.
Get started by getting a free quote so you know exactly what to expect.