The idea that several people would be paying too much for insurance is not far-fetched. The main reason for this is that many folks are not given an expert opinion on the array of plans available to suit particular needs and contexts. Saving on life insurance is twofold; one can either strive to pay less or get a much higher value relative to the premium. Ideally, people would find that they save more in the long run when one has a plan suited to their needs. With this type of protection plan, saving money on it does not necessarily mean paying less but increasing the value relative to the premium. The following should be done to ensure that you save more when you buy life insurance:
1) Shop around
Contrary to the belief of some; all life insurers are not equal. Premium rates for the same type of life insurance plan differ across companies. Even the plan structure is variable. You must shop around so that you can compare and contrast both the premium amount and what is in the plan for you. It may be that one company carries a higher premium but their plan has a rider that you’re looking for while the other one does not. It is important that you aren’t seduced by the first offer you get. It isn’t table salt you’re buying after all. If you choose the wrong company, you’d have many years of buyer’s remorse afterwards.
2) Educate yourself about the life insurance products
When making a decision to purchase, you should have a basic understanding of term insurance, whole life and Universal Life insurance. You should also be aware of the different types of plan structures available within each as well. You’d discover a refundable term plan, variable Universal life and many other differences that were designed to suit customer preferences. You’d save if you choose the right plan according to your context. The wrong plan would have you seeking a better life insurance product later, overspending on life insurance, or getting lower cash values than you could have had. If you choose a refundable term plan, you’re flushing your dollars regardless of the context.
3) Think term insurance
You must use this plan for short-term coverage needs. See term insurance as an aid to your insurance plan instead of perceiving it as a waste of money. It is cheap because it is pure insurance. Using term insurance in conjunction with cash-value plans can lower your aggregate premium while providing you with comprehensive coverage. To think that term plans only swallow your money is actually illogical. One can actually prove that a term plan is the ideal for short-term needs.
4) Use optional supplementary benefits (riders)
Optional supplementary benefits increase the value of your plan. Double indemnity riders can cover the full amount of life coverage required in the event of accidental death for example. If you need one million dollars worth of coverage and cannot afford the entire thing, it would be far cheaper if you take the double indemnity rider as a buffer. Riders increase the value of your purchase without increasing your premium proportionately.
5) Don’t be myopic
If you buy a small insurance policy initially and wait years before purchasing another one you’ll lose more money in the long-run. On the other hand, if you over-insure yourself in the long run, you’ll lose still. The proper approach to life insurance would be to anticipate coverage needs that you may not have as yet. The best way to estimate your needs would be to use a proper life insurance calculation method. If you know you intend to have a family and a mortgage later on, you can actually factor these in to arrive at a reasonable estimate. Approaching life insurance by guess is a sure way to spend more on it over time.
When you consider the aforementioned factors you are bound to make informed decisions and avoid buyer’s remorse. Buyer’s remorse with an enduring financial product like life insurance could be crippling. Be wise and be warned.