How to Save Money When Buying Insurance
Whether it’s being used to protect against lost income, business debts, a mortgage or any number of other reasons, the fact is that the vast majority of Canadians will require life insurance at some point in their lives. While the monthly cost for this coverage is often not that much money, cutting even a few dollars per month off the price can have a significant impact when you pay these premiums for many years. Here are a few tips to help you get the best deal on the coverage that’s right for you:
First of all, consider paying for your policy annually instead of monthly. Almost all insurance companies offer a discount for those who pay once per year and this discount, for an average sized policy, is usually around 8% which equates to almost one month’s premium!
The second tip, and a good life tip in general, is to quit smoking. Depending on your age, your life insurance premiums will roughly double if you smoke. A policy that would cost a non-smoker $75 per month will cost those that smoke around $150. Over 25 years, that extra premium will amount to an extra cost of $22,500! Most companies consider you a non-smoker if you haven’t had any tobacco products for a period of 12 months so there’s no better time than now to quit! Having said that, I never recommend to anyone that needs insurance to wait an extra 12 months to apply – it’s better to apply now and pay smoker rates for one year and then have the policy adjusted to non-smoker rates when your 12 months is up.
The third cost saving idea for most of you is to buy term insurance and skip the permanent stuff. While whole life and universal life (the two main permanent insurance types) both have their places and can be excellent options for the right person, the majority of people should really just buy term coverage. Term insurance is far cheaper and you can more easily afford the amount of insurance you really need to provide proper protection. When selecting term coverage, it’s critically important to get the right length of term so that you don’t face a costly renewal. If you need insurance for 20 years, buy a 20 year term instead of buying a 10 year term with plans to renew it. Terms can be purchased from 5-40 years in length and can also be bought “to age 65” depending on your needs. Generally, the younger you are the more likely that permanent insurance might make sense and as you get older, term becomes a better and better choice.
The last and by far most important tip to save money is to make sure you shop around. There is no good reason to consider buying insurance from an advisor that works for one specific insurance company or bank. No matter what you are told, they are not able to cut you a significant discount or special deal as each company’s insurance premiums are pretty well fixed nationwide. As these prices go up and down while each insurer attempts to even out their books, the company with the best deal for you is always changing. An independent advisor can and should give you a print out that shows every Canadian insurer’s price quote for the type of coverage you’ve decided on. From there you can look at the top couple of quotes and review the features and benefits of these best priced plans.
Purchasing life insurance is not an option or luxury but instead a necessity of financial security for most Canadians. Make sure you take the time to fully understand the different options out there and select the one that’s right for you. While you’re at it, make sure you use these tips to get the best possible price