However, according to a recent study conducted by Life Happens, a nonprofit organization dedicated to helping consumers make smart insurance decisions, and LIMRA, a worldwide association of insurance and financial service companies, that is actually a misconception.
Although there are life insurance policies considered “affordable” for most people’s budgets in the United States, the study found that 80 percent of respondents misjudged the price, with millennials overestimating the cost by 213 percent and Gen Xers by 119 percent.
Because September is Life Insurance Awareness month, we want to help clear up some of the misconceptions about life insurance as well as help you to save you money on your life insurance policy.
Here are a few ways to reduce the cost of a life insurance policy:
Choose a healthy lifestyle. When an insurance company calculates your premium rate, your health may or may not be factored into the calculations, depending the kind of policy you’d like to buy. Your “health” can include such factors as whether you smoke or use other forms of tobacco, sustain a healthy weight, and keep chronic medical conditions under control. Therefore, healthier lifestyle choices can often lead to lower premium costs. If you already have a life insurance policy, you also may be able to save on your premium by reporting weight loss, or that you’ve stopped smoking, or are following treatment for any medical conditions that you may have.
Avoid risky behavior. Just as your health will be taken into account, so will other lifestyle choices, such as your driving record and certain recreational activities that can have the potential to lead to higher costs. For example, if you are a frequent skydiver or car racer, you may pay a higher premium than someone who does not participate in those activities.
Buy your policy sooner in life, rather than later. Life insurance rates are linked to your age when you apply for insurance, and sometimes can be locked in for your entire lifetime, so it’s best to buy a policy earlier in life when possible, when your rate will be the lowest. Also, you will likely be in better health at a younger age, so your premium will probably be lower than if you wait to purchase the same policy when you’re older. In addition, you may be able to lower the cost of your policy by paying your premium annually rather than monthly. Although this option might not be available for all life insurance policies, it is important to ask your life insurance provider about any available discounts for which you may be eligible.
- What Determines Life Insurance Costs?
- How Does Age Affect the Cost of Life Insurance?
- What Can Lead to Higher Premiums When I Purchase Life Insurance?
Source: 2015 Insurance Barometer Study