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Life insurance can be very expensive if you are not careful when you are choosing your policy.
There is always a risk that you will buy more coverage than you actually need or will pay more for coverage than you should be. Over the years, this wasted money can add up to thousands of dollars that would have been better used for other needs.
By following a few simple tips, you can minimize the cost of your life insurance and make sure you are getting the coverage that you need.
Choose Term Life, Not Whole Life
Term life insurance covers you with life insurance for a predetermined period of time, typically around 20 years. Whole life insurance covers you with life insurance for the rest of your life, paying benefits to your beneficiaries after you pass on. Say you are purchasing life insurance with a specific purpose in mind, such as putting your kids through college if you are no longer able to provide for them. A term life insurance policy will protect you for the years it is needed, (during the years the kids are growing up) and will no longer be in effect when it is not needed any longer (after the kids have graduated college). Term life insurance costs considerably less than whole life insurance and is cheaper the younger you are.
Shop Around
Each life insurance company sets its own rates and has its own policies when it comes to calculating the premium cost of a life insurance policy. This means that the first quote you get is probable not the best quote you can get. By shopping around and obtaining quotes from several different insurance companies, you may be able to save a significant amount of money over the life of the insurance policy. Using an online quote tool is a great way to compare the typical rates of several insurance companies at a glance.
Avoid Policy Riders
The companies that sell life insurance try to increase the amount that you pay for your life insurance policy by offering policy riders that provide additional coverage for an additional cost. In most cases, these riders are unnecessary and are purchased because the policyholder fears the consequences of not purchasing them. When you purchase policy riders, you are essentially paying extra for protection from things that might not happen. To minimize the cost of your life insurance policy, stick to the basic policy and avoid adding on policy riders.