6 ways to get cheap life insurance in 2022 – Forbes Advisor

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There isn’t a bad time to buy life insurance, so if you are ready to shop around, you might be wondering how to get cheap life insurance.

One of the main reasons people don’t own life insurance is because they think it’s too expensive, according to the 2020 Insurance Barometer study by LIMRA and Life Happens. Many people believe this because they don’t have a good idea of ​​the cost of life insurance.

If you are one of those who thinks so, you might be surprised at how affordable life insurance can be. In fact, you can get cheap life insurance if you take the right steps when shopping for a policy.

1. Buy a term life insurance policy

You have two main options for purchasing life insurance: term life insurance and permanent life insurance. A term policy will provide coverage for a certain period of time, such as 10, 20, or 30 years. Two companies — Banner Life and Protective Life — offer 40-year term life insurance policies.

A permanent policy, on the other hand, will provide cover for life.

“A term insurance policy is the cheapest solution,” says Jon Voegele, president of Life Happens. More than half of respondents to the 2020 Insurance Barometer study estimated that a term life insurance policy of $ 250,000 for a healthy 30-year-old woman would cost $ 500 or more per year. However, the actual cost is around $ 160 per year, or only $ 13 per month.

A term life insurance policy can provide inexpensive life insurance for a time when you need it most, such as the length of your mortgage or until your kids graduate from college. In addition, most term life insurance policies offer the option of switching to a permanent life insurance policy. This is a way to upgrade to lifetime coverage at a later date, especially if you develop medical conditions that would make it difficult to purchase a new life insurance policy.

2. Buy sooner rather than later

Your age and health are two key factors insurers take into account when determining the rate you will pay for life insurance. The younger and healthier you are, the less you will pay for coverage. So, if you want to buy cheap life insurance, buy as early as possible. You will benefit from inexpensive life insurance for the duration of your contract.

Don’t make the mistake of thinking that you have time to budget or be healthier before purchasing a policy. The cost of coverage will only increase for each year that you wait to apply. In addition, you are at risk of developing more health problems as you get older. For example, a Haven Life term policy with $ 500,000 coverage for 20 years would cost around $ 19 for a 30-year-old woman in excellent health. The cost of that same policy for a healthy 40-year-old woman would be almost $ 31 per month.

Related: Best life insurance companies of 2021

3. Create a range of term policies to get more coverage at a lower cost.

One of the factors that affects the amount you pay for life insurance is the amount of coverage you purchase. The higher the sum insured, the higher the premium. To be clear, you don’t want to skimp on coverage just to save money. You need sufficient life insurance to protect those who depend on you for financial support.

Once you know the amount of life insurance you need, you can reduce the cost of coverage by using a strategy called laddering.

When you build a ladder of life insurance, you buy several smaller policies that expire at different times rather than a single large policy to cover you for several decades. “You can definitely save money by staggering,” Voegele explains.

This can allow you to have more coverage initially, perhaps when your kids are young or when you owe more on a mortgage, and then declines over time as your life insurance needs decrease.

For example, rather than buying a 30-year term policy with a benefit of $ 600,000, you can purchase 10-year, 20-year, and 30-year term policies with coverage of $ 200,000 each. In the first 10 years, you would have combined coverage worth $ 600,000. The amount of coverage you have will decrease as your term policies expire, but the amount you pay will also decrease over time.

4. Avoid unnecessary runners

When you purchase a life insurance policy, you usually have the option of getting additional features called endorsements. You can add life insurance riders that let you waive premium payments if you become disabled, add coverage for your children, and the list goes on.

While the extra coverage can be attractive, you can get cheaper life insurance by avoiding endorsements that you don’t necessarily need.

5. Avoid simplified issue life insurance

Traditionally, if you wanted to get a life insurance policy, you had to pass a medical exam. However, it is possible to skip the medical examination with certain types of life insurance policies. One is called simplified issue life insurance. This type of policy might seem ideal because it usually only requires you to complete an online application with a handful of questions about your health and lifestyle, and get coverage approved (or denied) within minutes.

However, if you’re in good health, a simplified issue policy can cost twice as much as a policy that requires more in-depth underwriting – the process insurers use to gather information about applicants. These policies cost more because insurers take more risk when they have limited information about applicants.

If you’re in good health, there are quick life insurance options available at competitive prices, thanks to technology that quickly assesses your personal information. Companies such as Bestow, Ethos, Fabric, Haven Life and Ladder offer accelerated term life insurance policies.

However, some policies require a life insurance medical examination in order to provide you with inexpensive life insurance.

6. Take the tour

It is easy to get life insurance quotes and the quotes are free. Don’t settle for the first quote you get. For starters, the life insurance quotes you see online are often at the lowest rate available, Voegele says. However, only a small percentage of applicants actually qualify for the best rate. Many people find that their final quote is higher after the application process.

It is also a good idea to shop around, as life insurance rates can vary widely from company to company.

If you want to take a DIY approach, get quotes from multiple insurers. Otherwise, hire an independent insurance broker who works with several companies and will know which one is likely to offer you the best rate according to your state of health and your age.

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