The amount of insurance premiums charged by an insurance company is determined by the underwriting department of the insurer. Actually, your insurer charges a premium based on individual risk profile. Life insurance premium is based on a variety of factors related to your life and life style. Some factors are under your control, and some are not. Anything that may reduce your life expectancy can also increase your premium. But do you know that you have certain ways to trim your life insurance quotes? While a ‘cheap’ policy may not really be what you desire while looking for a product as needful as life insurance, there are ways to keep your cost down without compromising on the needed coverage. The following are just some ways:
Avoid Over-Insuring Yourself
You should never under-insure yourself to keep the cost down. That’s a mistake because it leaves your loved ones in a fix if they have to claim. But it’s also a mistake to over-insure yourself. Your family needs financial security when life events may turn sour, and they really don’t need to win a lottery through life insurance. You should work out exactly how much cover you need and opt for a policy with the required sum insured only. If you over-insure yourself, you’ll have to pay more than you need each month and you could have easily spent that excess cash for the other needs of your family.
Choosing the Right Type of Cover & Riders
Different types of policies are available, but the kind of policy that you choose will have an effect on the cost of your policy. If you buy a term insurance, you will be only covered for the duration of the policy and the insurer will only take the risk of covering you during that time and set the price accordingly. You don’t get any monetary return on term insurance policies. If you are looking for some monetary return besides covering your life risk, you can opt for endowment policies. Riders are additional benefits on policies which can be bought for an extra premium. Obviously, these increase the policy cost. Therefore, carefully evaluate the need for a rider before deciding to buy it.
Researching the Right Life Insurance Quote
Use life insurance comparison sites for a time-efficient way of comparing prices and policy details through one quick and easy search.
Avoiding Reviewable Premiums
The typical life insurance quotes will be ‘guaranteed’ or ‘reviewable’. Reviewable premiums are initially cheaper but they can fluctuate during the full tenure of the policy and may take into account things such as your age and health status. Ultimately you may end up paying more than the guaranteed premium. It is suggested to opt for the guaranteed premium which remains fixed throughout the tenure of the policy.
Tenure of the Policy
The longer the policy tenure, the higher the premium will be. A 20-year policy tenure means that the insurance company will be covering the risk of your life for a long 20 years period. Ideally, your policy term should be maximum up to your retirement age. If you have more than one policy, obviously there is no need that all policies will have to be long tenure policies.
Premium Payment Mode
Insurers offer you a choice of premium payment mode – single one-time payment, annual, bi-annual, quarterly or monthly. Your total premium outgo is supposed to be less if you choose the single or annual payment options as compared to the monthly payment option. The monthly payment option may translate into a higher cumulative outgo for you.
Purchasing Online or Offline
The premium charged for policies bought online are generally less than what you would pay for the same policy bought offline via an agent or another intermediary. For the online policies, the administrative & distribution cost is less for the insurer, and the agent commission is nil. Purchasing a policy online or offline depends on how much customized advice you need in selecting the policy.
Your premium will be worked out based on your personal risk. If you buy the policy at a young age, you’ll usually qualify for paying a lesser premium than you might pay when you are older. This is because the chance of risk increases with age. By and large, younger people are healthier, and older people are considered at higher risk of developing health issues.
Whether you are a first time buyer or increasing your total life cover, the healthier you are, the better your rates will be. If you know you have some unhealthy weight to drop, taking up some exercise can trim the weight as well as the life insurance quotes.