How to Save on Life Insurance
Life insurance isn't cheap, but there are a few things you can do to save money on life insurance. Here's how you could save on your next life insurance policy.compare quotes today
Matt Hands, VP, Insurance & MoneySense
Having a life insurance policy can help take care of your family should you no longer be around to look after them. Of course, life insurance requires a regular financial commitment in the form of a regular premium. If you decide to get insurance, there are many factors to consider that will help you save on your premiums.
We believe every Canadian should only pay for what they need and the quality of service from a life insurer should meet the demands of daily life. Understanding these factors & tips will help to ensure you can uncover the best Canadian life insurance policy for the right price.
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Your personal circumstances are the number one cause of higher premiums, so the most significant thing you can do to save money on life insurance is to be as insurable as possible when you purchase your policy.
Buy life insurance when you're young
If you buy term life insurance, your premiums will be lower when you’re younger. Your premiums remain constant for the term but increase when you renew your insurance policy based on your age at that time. Essentially, if you get a permanent life insurance policy at a young age, you’ll be paying high premiums earlier in life to save on your premiums later in life.
If you’re not a smoker, your premiums will be lower. And if you do decide to kick the habit, you’ll get to pay less as well but it may take a year before you’ll be able to take advantage of lower premiums. Even if you enjoy the occasional cigar, your costs could be higher because some insurers may consider you a smoker.
The latest data from Statistics Canada reports that more than 12% of Canadians over the age of 12 were smokers. That means they also have to pay more for health insurance. Some insurance companies also offer lower premiums if you maintain a healthy lifestyle, aren’t overweight, and drink little or no alcohol.
Back in the 'wild west' days of life insurance sales (specifically, the 1980s and early 1990s) people were losing tens of thousands of dollars, simply because they had been sold the wrong product for them. By picking the right life insurance policy, you'll not only ensure you get the cover you need, but you'll get it at the right price.
Term or permanent life insurance
There are two broad types of life insurance to choose from: term or permanent. Term life insurance is for a specific amount of time (such as 5, 10 or 20 years), whereas whole life insurance is meant to provide protection for your entire lifetime. Premiums on term insurance can initially be much lower than permanent insurance. However, term insurance premiums increase when you renew your policy, whereas permanent insurance premiums stay the same throughout your life, therefore permanent life insurance is typically less expensive than term later in life, due to renewal costs with term life insurance. That said, each person has different needs, so it’s best to lay out a life insurance plan with a professional.
If you’re working, you likely have life insurance through work and your employer will often cover part of the premium. This can be a lot cheaper than buying insurance on your own because your organization affords you a discount. That said, if you’re young and healthy, a term life insurance plan could be cheaper. Also, group insurance might not be enough for your needs. Also, if you’ve downsized or move to another company, there may be a period of time where you have no insurance, as group insurance doesn’t go with you if you leave your job.
As with any product, you save money on life insurance by working the marketplace. This includes everything from shopping around, to purchasing multiple products from the same provider.
It’s common to look around for the best deal whenever you buy groceries; the same can be said for life insurance. There are dozens of life insurance companies to choose from. You’ll want to compare life insurance quotes for different types of life policies to see which one is right for you. Speaking with a licensed agent can really help you make that decision.
Bundle and save
When you have phone, Internet, and cable with the same services provider, you’ll often receive a discount. If you have auto and home insurance with the same financial services company as your life insurance, you may also be eligible for a discount—around 10% to 15% off, depending on the provider.
There are often perks of being part of a professional association or attending college and university, such as getting preferred rates on life insurance, or being included in a group life insurance plan for that organization. Expect a discount of about 10% off.
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Matt Hands, Business Director of Insurance
With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read more