The benefits of whole life insurance are that you are guaranteed to get a payout from it, no matter how long you live. The major disadvantage is that premiums are many times more expensive than for an equivalent amount of term life insurance.
Why is Whole Life Insurance More Expensive?
This type of insurance is initially more expensive than term cover because the company providing the insurance know that they are going to have to pay out the insured sum in all cases (as long as premiums are payed). This contrasts with term cover where the policy will only pay out if you die within the specified period. Don’t forget when making this price comparison that term premiums will often increase significantly when you come to renew, and a health emergency could mean that you are unable to obtain an insurance policy. Over the long term, the difference in the cost of these two types of insurance is not as great as it first seems.
How Can You Reduce the Cost?
If you can’t afford the level of cover that you want then there are ways to reduce your premiums, either by changing your lifestyle or simply shopping around.
When calculating your premiums, your medical history, lifestyle, and family history will be taken into account. There isn’t much that you can do about the medical history of you or your family (other than making sure of all the facts), but there are some lifestyle factors that can make a big difference to your premiums:
1. If you smoke, this will dramatically increase your premiums. You owe it to yourself to give up anyway to save money, improve your health and your life expectancy. Why not use getting your new life insurance policy as a trigger to give up smoking. In most cases you will need to have given up for more than a year for this to have an impact on you premiums.
2. Excess drinking is another factor in calculating your premiums. Don’t think that you can lie about it either. If you die the insurance company will investigate your lifestyle very carefully before paying out, and they have ways of finding out of the information on your application was incorrect. Start cutting down on your alcohol intake and you will see a whole host of health benefits as well as reducing your life insurance premiums.
3. Diet and exercise. Application forms will always ask for your height and weight, and any excess weight or obesity will tend to increase your premiums. Join a gym or a weight loss group and start shedding those extra pounds!
The final way to reduce your premiums is good old fashioned shopping around and bargaining. Don’t settle for the first offer that you receive. Use internet price comparison websites to seek out the best deals. Negotiate a reduced premium with the salesman.
Leave a Reply