Top 7 Ways To Save On Your Insurance Premiums

Best ways to save money on life & health insurance premiums

1. Shop the Canadian insurance marketplace with a Life Insurance Broker

2. Plan your permanent and short-term insurance needs

3. Take advantage of falling term insurance rates and/or your good health

4. Quit smoking for cheaper insurance

5. Use multi-plan or multi-life discounts

6. Spend more money now on premiums to save money over time

7. Buy insurance when you are young

If you own insurance policies or are considering buying life and health insurance, you probably want to get the best deal you can. Insurance feels very much like another added monthly expense, even if some policies can act as long-term investments. Buying the best insurance policy for your needs and getting the best price should be your goal. Here are 7 ways you can save money on your life and health insurance premiums in Calgary.

1. Shop the Canadian insurance marketplace with a Life Insurance Broker

If you have been approached before to buy life insurance from an agent in Calgary and you don’t know much about how life and health insurance works, what they offer you could seem very reasonable. There are many insurance agents out there who only represent one insurance company and can only offer you coverage from a very limited product line. A life insurance broker will have access to all the insurance companies in Canada, and can go shopping on your behalf for the lowest rates. Your broker should be running some kind of insurance software to compare the rates for term and permanent life insurance based on your age, smoking status, gender, etc. There are various software programs out there that will survey the entire marketplace to find you the lowest cost, and a good insurance broker will have access to most of the companies listed on the report.

2. Plan your permanent and short-term insurance needs

The type of insurance you buy is as important as the amount of insurance you need. Once you have analyzed how much life and health insurance you need to be properly protected, it is time to decide if you should buy term or permanent insurance. Life insurance is most commonly sold as term insurance, universal life insurance and whole life insurance. Universal life and whole life insurance is considered permanent life insurance plans. When you buy permanent life insurance it is like you are purchasing that block of money over the rest of your life; like an extended mortgage. The price is much higher for permanent life insurance because you will own the plan’s benefit for the rest of your life and there are cash values inside the policy. Term life insurance is like renting your risk protection for a limited period of time. Term insurance is much less expensive but will increase in price at the end of the term period (10, 20 or even 30 years). The price increase is steep, so buy the length of term insurance you will need now.

If you are looking at permanent life insurance, consider a blended plan, with some permanent coverage for the rest of your life and some term insurance for the short-term risk protection you need today. Lump in your mortgage, debts, cost of raising children and sending them to school, etc. into your term insurance needs, and buy a smaller amount of permanent insurance for protection for your spouse and your ultimate estate needs.

3. Take advantage of falling term insurance rates and/or your good health

If you have recently purchased term life insurance in the last 5 years or so, you would be surprised at the price of term insurance today. There has been a quiet term life insurance war in Canada between the major life insurance companies. Each company is trying to get more of the term insurance market share, and they have been lowering prices to win new customers. The winner in this situation is you. Term life insurance has never been cheaper in Canada than it is today. Even if you are 5 years older, a new policy could cost you less than your premium for life insurance on a policy that is 5 years old. You should take a look at the rates in the market today to see if reapplying for a new policy would in fact save you money.

Also consider the benefits of locking in your term life insurance again for 10 or 20 years. If your policy is 5 years old, you are that much closer to your renewal date when the premiums will spike. Getting a new policy extends your time frame out many more years and keeps your premiums low.

If you are in better health today than you were a few years ago, you could qualify for Preferred rates on your insurance. Healthy people are given reduced premiums because they are less likely to die of an illness in the near future. Have you lost weight, taken up exercising, eating more healthy, etc? If so, you could possibly now qualify for a preferred rate term life insurance policy which will save you even more money.

4. Quit smoking for cheaper insurance

This is not meant to sound like a speech on why you should quit smoking. Everyone knows the risks associated with smoking, especially insurance companies. They have illness and death statistics of smokers vs. non-smokers going back almost 100 years. The older you are when buying insurance as a smoker, the higher your premiums. The price for life and health insurance can sometimes be triple the cost for a non-smoker.

If you have tried to quit smoking, though about quitting, or are in the process of quitting smoking, here is another good reason to do it. Your life and health insurance premiums will likely drop in half or better once you are a non-smoker. You are considered a non-smoker after 12 months without any form of tobacco or nicotine product (including aids to quit smoking like The Patch or nicotine gum). Once you are a non-smoker you should redo your life and health insurance immediately to save money. It is not uncommon for a person who has quit smoking to relapse and take up the habit again. If you have gotten new insurance policies as a non-smoker and then become a smoker again, the insurance company cannot raise your rates: you are then considered a non-smoker for the life of that policy.

5. Use multi-plan or multi-life discounts

The basic price for life insurance you see on the computer might not be the final price. Many companies will combine individual life insurance policies in the same household into a package deal, and waive the administrative fee on additional policies beyond the first one. Some companies will put multiple people each with different amounts of insurance protection into one policy, with only one administrative fee. Disability insurance can be set up with discounts where 3 or more people working in the same company come together and all buy their insurance at the same time, like partners in a small business. Be sure that your life and health insurance is set-up correctly with the advice of a qualified broker to take advantage of all the discounts possible.

6. Spend more money now on premiums to save money over time

This sounds crazy. How can spending more now save me money? There are two ways this can happen; buying longer term insurance plans now and quick paying your permanent life insurance.

For term life insurance, you can get a very cheap rate if you buy a Term 10 policy today. That is great if you only need the insurance for the next 10 years. What if you need the insurance for 20 or 30 years? The renewal rate after 10 years will be very high, and the cost of paying the renewal premium for another 10 years will be far higher than getting a Term 20 policy now. Here is an example: a Calgary man age 40, non-smoker, buys $500,000 Term 10 life insurance today for $34.65 per month. This will be a total cost of $4,158 for his $500,000 of life insurance over the next 10 years. If he renews that policy, it will cost him $268.65 per month for the next 10 years, which is $32,238. His total cost for 20 years is $36,396. If he just bought a Term 20 life insurance policy today it would cost $60.65 per month, totalling $14,556 over 20 years. He will save $17,682.

Permanent life insurance can also be far cheaper if you quick pay your policy. This means instead of paying premiums for the rest of your life you pay for only 10, 15 or 20 years and then you are done. You own the life insurance and no further premiums are due. Let us look at a quick example: the same Calgary man age 40, non-smoker, buys $250,000 whole life insurance with a level premium for life. That would cost him $154.58 per month. If he lived to age 80, he will have paid out $74,198 for his beneficiaries to receive $250,000 tax free. If he bought a guaranteed 20 pay policy, he will pay $196.25 per month, totalling $47,100 over 20 years saving the man $27,098. If he paid it up in just 10 years the monthly cost would be $300.63 which seems high, however the total cost is only $36,075. As you can see, the faster you pay for your permanent life insurance, the lower your total cost.

See Life Insurance Funding Options for more info on how to save money with different types of life insurance.

7. Buy insurance when you are young

The younger you are when you buy the insurance you need, the lower the total cost. Also, as you age everyone develops some health problems. These health conditions might make it hard for you to get the insurance you need, or your will be rated and insurance will cost more. Locking in a good price when you are young and healthy is best for your insurance plans, especially if you are considering permanent life insurance.

Let us look at an example of a 30 year old Calgary woman vs. a 50 year old Calgary woman, each buying $250,000 of universal life insurance. Both of them plan to pay premiums for only 20 years and then be done paying for their life insurance. The 30 year old woman needs to pay $99.08 per month. The 50 year old woman needs to pay $283.29 per month. Both will be done paying for their insurance in 20 years and own $250,000 of life insurance. Total cost for the 30 year old woman: $23,779. Total cost for the 50 year old woman: $67,990. If you want to save thousands of dollars on your life insurance premiums, start to plan early vs. later in life.

Life Guard Insurance can help you save money on insurance premiums

I hope these 7 ways to save money on life insurance have given you some good ideas on how you can save. At Life Guard Insurance we represent all the major life insurance companies and can negotiate you the lowest possible price for insurance at the highest possible value. Contact us about saving money on your insurance premiums today.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about the best ways to save on insurance premiums would also be very much appreciated.

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1. Top 7 Ways To Save On Your Insurance Premiums In Canada
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3. Life Insurance Funding Options in Calgary

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