A common question when looking to buy life insurance (LI) is “How can I afford it?” While there certainly are expensive LI policy options, there are also many affordable options, and insurers. By carefully considering LI needs, policy options, and insurance providers it is possible to find an affordable insurance quote.
The first step to getting an affordable insurance quote is to properly determine your coverage needs. If an individual is looking to buy LI solely for the purpose of insuring against premature death before they have acquired an estate of assets they might choose term LI as opposed to whole of LI. Term LI rates are generally cheaper. If an individual simply wishes to cover funeral costs they might opt not to purchase LI at all, and simply purchase funeral insurance. Determining the needs of the policyholder has a significant impact on finding a LI policy that is suitable and affordable. A LI calculator can help assess these needs when searching online for a LI quote.
Another common way to make insurance affordable is through self-insurance. This can be done simply by setting aside a sum of money saved for a specific situation in addition to purchasing an insurance policy. This money can supplement the costs the insurance pays. There are investments, such as annuities, which may also include death benefit options similar to LI. Purchasing a cheap LI policy as well as an investment can make insurance more affordable, as well as providing for both insurance and savings needs.
Certain policy riders can also make insurance more affordable. For example, some policies offer both a spouse and a child rider for an additional fee. Typically this fee is far cheaper than individual insurance. A joint LI policy, with a child rider can be far more affordable than purchasing multiple policies separately.
Similarly as LI needs change it is important to see whether your policy’s coverage can be increased rather than purchasing an additional policy, or giving up a policy and purchasing a new one. Typically LI is more expensive initially as the first years of a policy include fees; forfeiting a policy to purchase a new one would involve paying these fees again, which may also increase with age.
Comparing fees between insurers is also important. In Australia, generally speaking, most insurers offer similar options, however they do not necessarily charge the same for these. In fact some companies may provide options like a terminal illness rider for free where as another may charge extra for this. Buying LI directly from the provider when possible is another way to make LI more affordable. Purchasing LI from an agent generally involves the agent receiving a commission. This increases the cost of the policy since the insurance company needs to charge more in order to be able to pay the agent.
George Pettit is a journalist and financial specialist from Australia. He writes for several magazines about topics such as real estate, investments, life insurance quote, currency trading and much other which attract attention of many readers.