Category: Life Insurance
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By Leon Hoffman February 2, 2021. Life Insurance Financial Wize, FinancialWize, How To, summer, tips
How to Find Affordable Life Insurance
Life insurance can be expensive and if itâs essential those high costs can leave a nasty taste in your mouth. You may wonder if itâs worth purchasing a policy at all, which could place your family in jeopardy as they wonât have the cover they need when you pass.Â
However, there are a few ways you can bring those costs down and get affordable life insurance. So, donât despair, and take a look at these top tips for cheap life insurance.
How are Life Insurance Payouts and Premiums Judged?
Insurance underwriters set your premiums and your payout based on the likelihood that you will die during the term. It sounds pretty morbid, but these are for-profit companies weâre talking about and when death is your only liability, thereâs no time for gentility.Â
Itâs something that frustrates everyone who has ever been quoted high premiums, but itâs important to see things from the perspective of the underwriter. If youâre 100 pounds over your ideal weight, your risk of heart disease, cancer, and countless other diseases increases, and you become more of a liability.Â
It doesnât matter how much you convince them that youâre on a diet and will lose all of that weight eventuallyâas things stand right now, youâre more of a liability than someone who weighs 100 pounds less.
Of course, itâs possible to be 140 pounds and unhealthy, just as itâs possible to be 240 pounds and healthy, and this is an argument that many applicants make. But those are the exceptions. The oldest woman ever smoked until the day she died and made it halfway through her 122nd year, and everyone knows of at least one smoker that continued the habit well into their 70th and 80th year, seemingly unaffected.Â
However, the average smoker will die 10 years before their non-smoking counterpart and their risk of contracting a host of diseases increases exponentially for every decade that they stick with the habit. Should a life insurance company dismiss your habit just because of a 122-year-old French woman? Of course not.Â
These are statistics and probabilities; they focus on the most likely and the most common. By their very nature, there will always be exceptions and outliers. A life insurance company doesnât care about any of these because as long as they focus on the events that are most likely (obese policyholders and smokers will die young; preexisting medical conditions are more likely to reoccur than if they didnât exist at all) the premiums will exceed the payouts and they will turn a profit.Â
The sooner you apply for life insurance, the better your chances of getting a high payout and a low premium. Age is one of the biggest factors in determining your mortality risk. A 20-year-old has a high chance of surviving a 30-year-term, but for every additional year, those odds decline and by the time they hit 55, the odds are no longer in their favor.
Starting early doesnât just protect your loved ones if you die before your time, it also gives you more options. This is when whole life insurance policies are at their most beneficial. These will payout regardless, even if you live to be 100. The life insurance company will still benefit, however, because many of these policies either lapse because of non-payment (a lot can happen in those 80 years) or the policyholder takes the cash value.
Theyâre like a life insurance policy and saving account bundled into one, but they become less viable as you age.
Make Big Changes
You probably knew this tip was going to be here, but itâs worth mentioning: If you smoke, stop; if youâre obese, lose weight. We canât stress enough how much of a difference these things will make to your life insurance application.
If youâre a smoker and youâre obese, youâre a massive liability. Statistically speaking, youâll be beating the odds if you make it to your 60th year, which means a 30-year term stops being a viable option when youâre just 31! If thatâs not enough to scare you, then thereâs nothing we can say that will.
By quitting cigarettes and dropping a few dozen pounds, you improve your chances of living a long and full life, which, in turn, means youâll get cheaper life insurance premiums.
And these are not the only changes you should consider making. Many applicants fail to calculate just how much of a liability they become when they partake in extreme sports and activities such as base jumping, parkour, sky diving, and rock climbing. Some of these are riskier than others, but in all cases, the underwriter will compare them to the averages to determine your likelihood of dying young.
Roughly 10 skydivers will die for every 1 million that jump on a regular basis. However, more than 40 times as many will die from base jumping and youâre 30 times more likely to die from extreme mountaineering than you are from base jumping.Â
Some of these are less risky than you might think. For instance, youâre twice as likely to die from walking than you are from horseback riding, as the former puts you at risk of major pedestrian accidents.Â
Youâre also more likely to die from getting out of bed aged 45 than you are from SCUBA diving. So, assess the risks, try to look at your situation from the underwriterâs perspective, and make changes where necessary without giving up all the things that you enjoy.
You can apply for life insurance as soon as you lose weight or give up risky and dangerous activities. You can reap the benefits straight away when you do this, but the same canât be said for everything.Â
Smoking is a great example of this. If you quit smoking today, you will need to wait at least 12 months before that has an impact on your life insurance policy. It only makes sense when you consider the majority of short-term cessations will result in relapse.Â
The underwriter also wants to protect their bottom line, because you wonât start feeling the health benefits until several months have passed and before that time elapses, youâre still a high risk for many diseases and conditions.
Look for Group Life InsuranceÂ
If you canât get life insurance by applying directly, you may be offered it through an employer. Group life insurance is offered to large groups of people and is typically provided by employers.
You probably wonât get the same extensive cover, but you will get some cover, and this is a great alternative if youâre struggling to seal the deal yourself.
Only Buy What You Need
Itâs tempting to get a big payout when youâre buying life insurance as that payout can then provide a good life for your loved ones. But life insurance shouldnât be like winning the lottery. Itâs not designed to allow them to quit work and spend the rest of their lives sipping champagne on Mediterranean cruises.
The payout should cover all of their needs for several years, while also repaying any debts that you (or your loved ones) have. If you have a mortgage, it can also go towards repaying this.
Many life insurance experts recommend that you stick with the absolute basics in situations where the remaining family members can still support themselves. For instance, letâs suppose that youâre a 50-year man in relatively good health. You earn roughly the same money as your wife, but sheâs 10 years younger than you and you also have a son at college and a mortgage with $50,000 left to pay.
In this case, the payout should be at least $50,000, plus the size of remaining debts. However, you donât need to include all debts in this. Some debts, including all federal student loans, will die with you, which means your son or your wife wonât be burdened with them. For example, if you cosigned on a $20,000 federal student loan and also have $10,000 in joint credit card debt, a death benefit of $60,000 will be enough.
That way, your wife can clear the mortgage and debt in full, thus reducing monthly liabilities and putting more money in her pocket at the end of the money. If she ever faces a financial crisis, such as the loss of a job, sheâll have a fully paid house to use as collateral and can take loans and equity loans as needed.
This is the best way to provide for your family after your death without crippling your finances in the present.
And Finally, Take Your Time
The sooner you apply, the better. But that applies to years and not weeks, so donât feel like you need to rush. If youâre not sure about the process and need a little advice, spend some more time reading through articles and guides and speaking with current policyholders.
Providing yourself with a little extra shopping time will also make it easier to compare and to find the best life insurance rates and the best payouts based on your specific budget and situation.
How to Find Affordable Life Insurance is a post from Pocket Your Dollars.
By Leon Hoffman January 19, 2021. Life Insurance, Unattended Cleanup Tips budget, Buy, Buying, Credit, Credit Card Debt, Debt, Family, Financial Wize, FinancialWize, How To, Insurance, Life, Life Insurance, loan, loans, mortgage, protect, Saving, Shopping, tips
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By Leon Hoffman January 18, 2021. Life Insurance Financial Wize, FinancialWize
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