Some smart ways to prevent Life Insurance Premium Spike in your life:
Life insurance provides an added layer of comfort in knowing your loved ones will be set up financially should the unthinkable happen, but life has a way of changing, and with that, so do your life insurance premiums. Fortunately, there are some sneaky smart ways to help halt a rate increase. Here’s how you can keep life insurance costs manageable without compromising on coverage.
1. Live Healthy
Your health is amongst the most important reasons which could influence your life insurance premium. The insurance companies rate your health according to the results from medical tests, and a pre-existing condition, obesity, smoking, or high blood pressure will raise your premium. Some of the healthy ways to reduce risk profile and keep premiums at bay include regular exercises, a balanced diet, not using tobacco, and having alcohol in moderation.
2. Periodical Review of Your Policy
Life insurance needs often change throughout an individual’s life. As a person grows older, pays off debt, or while children may grow older and become financially independent, the individual may no longer need the level of coverage purchased originally. Periodically reviewing your policy enables you to make any modifications necessary in your coverage based on your existing needs. In this case, this would hopefully reduce premiums. Unnecessary coverage is reduced, which is prudent not to suddenly drive up your premiums.
3. Select the Correct Policy Type
Not all life insurance policies are the same. Term life typically has lower premiums compared with whole life or universal life because it only covers the policyholder for a specified period of time. If cost is your top concern, then term life may be the superior insurance product for you. If you require some form of a policy that builds cash value over time, a whole or universal life could be a better option-though more expensive.
4. Shop Around for the Best Rates
Insurance companies assess risk differently, and hence their premiums can vary considerably between one carrier and another. This is one of the reasons shopping your rates with a number of insurers makes a lot of sense. Some companies may specialize in providing insurance to people with specific health issues or habits and as such may be able to provide more competitive rates. An independent insurance agent will be able to guide you through the options and help find the most competitive premium based on your situation.
5. Bundle Your Policies
Most all insurers offer a discount for policyholders bundling their policies, such as life, home, and auto. You could save a good amount of money by bundling on your life insurance premium. If you already have other forms of insurance, check to see if your provider has an available bundling discount. Not only will this strategy streamline your payments, but it will also help to keep at bay your premiums.
6. Pay Premiums Annually Instead of Monthly
When possible, pay your premiums annually, not monthly. Most insurers charge a service charge for the convenience of paying monthly, and that can add up over time. You do not have to pay these extra charges when you pay annually, which reduces your overall cost of premium effectively.
7. Take Advantage of Workplace Life Insurance
Many employers offer group life insurance as an added benefit, often at a lower cost than what one would get on their own. Although these policies generally carry low coverage amounts compared to individual policies, it is a good, affordable way to add to existing coverage. Make sure to assess your needs and take advantage of any employer-sponsored life insurance options available to you.
8. Improve Your Credit Score
Believe it or not, your credit score could affect your life insurance premium. Insurance companies look upon a high credit score as indicative of responsible behavior and, therefore, less risk. You can increase your credit score by making timely bill payments, reducing debt, and using credit responsibly to lower your premiums.
9. Lock in Your Rates Early
Generally speaking, life insurance premiums go up with the age of the applicant. This means that the younger you are when you initiate a policy, the lower your premium will probably be. If you can foresee any reason that you may need life insurance, it is prudent to lock in your rates early. Even if your circumstances change, having a lower rate locked in can save you money in the long run.
10. Avoid High-Risk Hobbies
Skydiving, scuba diving, and car racing are classified as very high-risk activities and will significantly increase your life insurance premiums. To an insurance company, these activities carry a high level of risk, thus they charge more to provide adequate coverage. If you wish to pay lower premiums, then it’s time to minimize or eliminate these activities, or plan to pay extra for your coverage.
Closing Thoughts
Life insurance is a component of financial planning, and sometimes it becomes costly. These savvy strategies ensure that you are avoiding unnecessary spikes. Keeping your lifestyle healthy, reviewing your policy, selecting the right type of insurance, and getting all possible discounts keep your life insurance premiums affordable without having to cut back on coverage that your family needs. A little planning and a few informed decisions now will pay big dividends over the life of your policy.