Your health insurance can remove some financial burden by covering your medical expenses if you need any medical care. Similarly, your life insurance may save your family from financial distress after your death. These two types of insurance are important because they help you prepare for unforeseen circumstances regarding your health and death.
A recent survey shows that about 38% of Americans can’t afford a life insurance policy. Although there are other reasons why some people don’t have life insurance, the principal reason is that most people can not pay the premium cost.
If you don’t have a life insurance policy because of its high premium cost, you need to know the following steps to get a life insurance policy at a lower cost.
1. Don’t Secure Excess Death Benefits.
Many people pay more money on life insurance because they secure death benefits exceeding what their families need. To avoid securing excess death benefits, you should use widely available and acceptable formulas to calculate the death benefits you will get from your life insurance policy. With the formula, you can decide to secure more death benefits to cover your debts.
Generally, if you are the family breadwinner with an annual earning of $70,000, you donâ€™t need a higher death benefit. In your case, a $750,000 death benefit is enough and will save you more money.
2. Take Care of Your Health Before Applying for Life Insurance
Life insurance companies will give you lower premium costs when applying for their insurance policy if you are healthy and without life-threatening diseases. This is because the insurer will take the minimal risk of paying death benefits.
You can take various steps to improve and care for your health. Each step depends on your current health status and medical need. If you are a smoker, you should quit smoking, and if you are overweight, you should engage in activities that will shed that excess weight. These health improvement steps could give you lower insurance costs.
3. Choose Term Life Insurance Policy Instead of Whole Life Insurance Policy
The two major types of life insurance are term life insurance and whole life insurance. Term life insurance lasts for a defined time and doesn’t offer cash value accumulation, while whole life insurance lasts for your entire lifetime and offers cash value accumulation. The whole life insurance allows you to borrow or access this cash value.
Whole life insurance has a higher cost than term life insurance. If the insurance premium cost is your issue, you should opt for term life insurance. If you get a 30-year term insurance policy and are 35 years old now, this will cover your surviving spouse until they reach the FRA. At FRA, they can receive IRA distributions or pension income.
You may need to abandon other expenses to get a life insurance policy. But it’s good to plan to protect your loved ones when you die. You might spend less money on life insurance if you follow the above steps.
Many insurance policies are designed to protect you, your loved ones, and your assets. However, a life insurance policy is a crucial type of insurance you should get because it protects your loved ones after your demise.