If you’re in the market for life insurance but think it costs too much, you may want to think again. Most people overestimate the cost of life insurance by almost three times, says LIMRA, a research organization that tracks the life insurance industry.
According to the Life and Health Insurance Foundation for Education (LIFE), people forgo buying life insurance, because they have other financial priorities.
But basic life insurance can be surprisingly affordable for everyone, even older individuals. To find coverage at a good price, you’ll want to comparison shop, but there are other strategies you can use to find good coverage.
First, consider group life insurance. If you’re employed, your employer may offer basic group life insurance as a benefit. Premiums can be 10% to 20% less than individual life insurance because of enrollment and billing efficiencies.
Second, you may want to think about annual renewable term life insurance, which guarantees your insurability for a set period, but comes with a premium that increases each year during the term.
In the early years of the policy, premiums for annual renewable term life are less expensive than those for a comparable policy that doesn’t have an adjustable premium.
Finally, you may want to buy as much term life insurance – which covers you for a certain period and pays a death benefit if you die while the policy is in force – as you can afford now.
The average cost of basic term life has dropped by about 50% in the last decade due to longer life expectancy and greater efficiency in product design and administration.
It’s important to consider your unique needs when selecting a policy. There are many types of life insurance, the products vary and there are nuances to consider when choosing a policy. A professional can help you sort through the options and choose the policy that’s right for you.