There’s a reason some consumers are reluctant to buy life insurance: they’re worried about the cost. For some reason, life insurance has a reputation for being expensive, although it is more than possible to arrange an affordable policy.
In fact, the average consumer spends just $82 a month on life insurance, according to a new doxoINSIGHTS report. It’s certainly not a negligible amount, but it’s also an amount that you might be able to fit into your budget quite easily, especially if you’re willing to make changes to other spending categories (think spending non-essential such as cable and restaurant meals).
That said, there are also a few steps you can take to spend less on life insurance. Here are a few to consider.
1. Don’t wait too long to apply
The younger you are when you buy life insurance, the more likely you are to get affordable premiums based on your good health. As you age, your health may deteriorate and require you to pay much more expensive premiums.
2. Choose term life insurance over whole life
Term life insurance only covers you for a specific period of time, or term, and it does not accumulate any kind of cash value. This means that if you buy a 30-year term insurance policy, pay those premiums for 30 years, and don’t die during that time, your insurance policy won’t pay a dime.
It may seem like a bad deal at first, especially compared to whole life insurance, which offers the benefit of permanent coverage. and cash value you can benefit from. But it’s actually not for a big reason: you will pay a ground less for term life insurance coverage than for whole life insurance.
In fact, many people who buy whole life insurance end up letting their policy expire because they can’t pay the premiums. Or, to put it another way, they pay those premiums for a few years and get nothing back because they let their policies expire before the cash value amounted to anything.
3. Don’t buy too much coverage
If you are looking for a life insurance policy that will pay out a death benefit of $2 million, it may cost you more than a policy that will pay out $800,000. But if you don’t need $2 million coverage, you can just choose not to pay – it’s as simple as that.
Many people are tempted to stock up on life insurance, but it can make their premiums unaffordable. It’s better to determine the specific coverage you need than to pay extra for coverage you don’t need.
A good rule of thumb is to get enough coverage to cover 10 times your salary. If you make $80,000 a year, for example, an $800,000 policy should do the trick.
While life insurance certainly doesn’t cost anything, it can be more affordable than you think. It pays to research quotes from different insurers so you can see what kind of price you’re looking at for the coverage you need. You might be pleasantly surprised at the numbers you get.
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