A number of factors have converged to make this year one of the best for finding optimal coverage-premium ratios. 2019 is the perfect time to take out life insurance.
There are many reasons why this is the case, including advancements in technology as well as improvements to insurer management systems. In this article, we take a closer look at this situation and explain the reasons behind it. Keep reading to discover why the price of life insurance is going down and why this is a great time to buy a policy.
Life Insurance, Cheaper Than Ever: Table of Contents
Why the Price of Life Insurance Has Gone Down
If taking out life insurance is part of your plans for the future, consider doing it soon: life insurance prices are proportionately cheaper now than they ever have been. The quality-price ratio between contributions and coverage, with premiums on one side and life insurance on the other, is very favorable to policyholders.
There are several factors that have come together to make policies more accessible. The most important are the following:
- Advances in risk analysis technology. The introduction of technologies such as big data simplifies the risk analysis tasks performed by insurers during the qualification process. Better computers, more sophisticated software, and access to technologies like artificial intelligence are improving insurance companies' processes, like calculations and analysis. As such, they can be much more precise in assessing the risks they assume and filtering candidates who would otherwise cost the insurer too much money. By reducing their risks, they can offer better terms for premiums and also better coverage for those insured. These new technologies can also reduce the time needed for the qualification process. This even means offering instant policies, thanks to algorithms that calculate the risk for an aspiring policyholder.
- Customized pricing. The ever more precise use of technology allows insurers to offer customized pricing. They do this using medically underwritten insurance policies. If the person seeking insurance is in good health and leads a healthy lifestyle, it is very likely that he or she will quickly receive a quote that is adapted to their needs. This option is offered, above all, for term or temporary life insurance.
- Lower cash requirement. As you know, permanent life insurance has mechanisms that are used to invest money from premiums and generate savings, which is then used to consolidate the payout and accumulate cash value, money that the insured can withdraw or use as a loan. In order to guarantee the availability of cash for making payout claims and cash value withdrawals, insurance companies must maintain significant savings reserves and always demonstrate their solvency. However, in recent years, most states have altered the standards that regulate these mandatory reserves, and this has given insurers more flexibility to use the funds they manage. They can allocate more money to investment, which can generate more earnings. This way, they can also reduce the price of their products and offer lower premiums and stronger coverage.
Should You Wait for Prices To Keep Going Down?
These improvements in tasks and legislation advance gradually, so it makes sense to expect that prices will go down little by little. This means that many people ask themselves a simple question: is it better to wait a few years to obtain an even cheaper life insurance policy? The easy answer is no.
It is true that insurance prices may continue to drop in general, but those paid by one specific person will get more expensive as that person grows older.
This is due to the fact that the older a person is, the greater the risks assumed by the insurers when selling a life insurance policy. Life expectancy goes down, the possibility of getting sick increases, and the years remaining for premium payments decrease. As a result, insurance companies increase prices with age.
In fact, many experts agree, indicating that the premiums a policyholder must pay increase around 10% with each year of life, which means that each year you delay signing a policy, you will have to pay premiums that are 10% higher. Therefore, the answer to the question is conclusive. It is not worth it to wait.
In fact, your best bet is to take out a policy as soon as possible. Many people even take out child life insurance. This child, juvenile, or even student insurance is a relatively cheap product, because risks for young people are very low. Later, these policies can be converted into broader insurance and will always have very accessible premiums.
But even if you are not so young, the truth is that currently, life insurance is much cheaper than people think, which means it is always a good purchase. That said, it is important that you carefully calculate how much coverage you need as well as what age is best for you to take out a policy before you buy it.
Advice for Purchasing Life Insurance at a Good Price
As we have seen, taking out insurance while you are still young is one of the best ways to save money when purchasing life insurance. But there are many other ways to obtain better monthly premiums and more accessible policies. We would like to remind you of some of the best advice for reducing life insurance costs.
- Look for quotes. One of the best ways to obtain good prices is to look at many offers. For this purpose, the best thing to do is to ask for quotes from several insurance companies. In this process, it is wise to be very candid and give the insurer all of the information they ask for. Lying on quotes or during the qualification process is one of the worst mistakes you can make when taking out life insurance.
- Laddering strategy. An interesting way to obtain better prices is by “laddering” your insurance. This is generally done with temporary life insurance, which is cheaper. The idea is to ladder several policies so that you always have coverage and one takes the place of the other. This way, you can obtain good payouts and pay premiums that are quite low.
- Start with a term insurance policy. Temporary insurance in particular is a very convenient solution to acquire a less costly policy. They are always more cost-effective and they are a very convenient option to secure coverage during special times, such as your children’s early years or their academic careers. Term insurance is cheap, easy to obtain, and offers good coverage. In exchange, it has limited duration, and if the insured is still alive when the policy expires, no payout is made. The most interesting aspect of these policies is that they can be converted into permanent life insurance without the need to go through another separate qualification process.
- Annual payments. One way to save is to pay annual premiums all at once. While it is obviously costly to make a large single payment, you will then have the rest of your money available for other needs. Another similar solution is to turn to single premium insurance, which is completely paid off all at once.
- Reassess your health. If your health was not at its best when you took out your life insurance, you may have been charged higher premiums. If you have gotten better since then and no longer have health issues, you can ask for a policy revision and a reassessment of your health status. You will probably save some money.
- Eliminate riders. When you review your life insurance, take a look at the riders you have signed. It is possible that there are riders you don't need and can ask to be voided. Riders provide extra functionality for your life insurance, but they also make it more expensive. If you eliminate some, you will have lower premiums.
As you can see, life insurance can be obtained for less money than you think. And of course, this is the perfect time to take one out, because better quality-price ratios have never been offered. You just have to find the option that interests you most and seize the moment. And remember that the longer you wait, the more expensive they will get.