Think You Can't Afford Life Insurance? This May Help!
Updated On Sep 19, 2021
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Families who feel that there is a financial squeeze may assume that life insurance can be an expense, may opt-out or drop the idea of investing their money in a life insurance policy. Life is very uncertain, and life insurance can provide financial security to the life assured and his/her family in difficult times. In case the primary breadwinner of the family passes away and there is no financial backup or financial security for the family, how will they manage their expenses and maintain their lifestyle in the absence of the life assured. Life insurance can act as a financial cushion, in case the primary breadwinner of the family passes away during the policy tenure.
Tips To Reduce The Premiums
Life insurance can be a good investment for the average family, below mentioned are some tips to help reduce the number of premiums you pay:
- Only Pay for the Coverage Period: When it comes to the duration of the policy, there are two types of life insurance: Term Life Insurance and Whole Life Cover. Whole life insurance policies provide life cover until the day of the life assured’s demise, while term insurance policies last for a fixed period of time and provide a death benefit if the life assured passes away during the coverage period. Though it may seem that whole life cover is a better option but they are relatively expensive as compared to term life insurance. Recognize your needs to purchase a life cover, if it is to be purchased to pay the mortgage, what is the time period of your mortgage? Or if you want to ensure the financial security of your children, know when they will require funds to fulfil their expenses.
- Consider Decreasing Term Insurance Cover: Under a decreasing term insurance policy, the basic sum assured of the policy decreases every year by a pre-decided percentage. The premium for such a term insurance policy remains the same, but the sum assured decreases over the policy tenure. This type of term insurance is ideally purchased to pay off a mortgage, that is why they are popularly known as mortgage life insurance. The objective of buying such a policy is to leave adequate funds for your family, so that they are able to pay off your outstanding mortgages, in case of your untimely demise during the policy tenure. Under decreasing term insurance, you only cover the amount and time period of the loan.
- Quit Consuming Alcohol/Tobacco: This is no surprise that a healthy lifestyle can help reduce the premiums. Along with other factors such as Body Mass Index, age, medical records the insurer will ask about your alcohol intake and tobacco consumption before you purchase a life insurance policy. Consumption of alcohol/tobacco has a significant impact on the premium calculation for a life insurance policy. So if you're thinking about quitting your personal habits such as consumption of alcohol/tobacco, you should consider doing it a while before you purchase a life insurance policy, to reduce the premiums. Premiums for people who consume alcohol/tobacco on a daily basis are comparatively higher as compared to people who don’t because alcohol/tobacco can cause serious health issues and people who consume either of them on a regular basis are considered with the high risk involved, as they require extra coverage.
These tips can help you reduce the premium rates and make premium payments more workable for you. Life insurance is a great way to ensure the financial stability of your family in your absence.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.