There are countless articles about Life insurance savings tips but normally they suggest not more than 5-10 ideas. We decided to go further and talked to Chantal Marr, a licensed Life Insurance Broker and recognized industry expert who is a Head of LSM Insurance. Chantal has shared with InsurEye his expert knowledge about savings opportunities in Life Insurance. Giving the size of the life insurance premiums, these savings can add up to hundreds dollars per year. So let’s start:
1. Young means cheaper: Apply for the policy when you are young and your premiums will be lower.
2. Be healthy, save on insurance: If you are in a good health and have a good build when you apply for a life insurance policy, insurers will reward that with lower premiums. Insurance companies use a so called BMI index (body-mass index, a ratio of your height and weight) to determine your premiums.
3. Family history: Having a healthy family without any serious diseases lowers your life insurance premiums as you are less likely to face a critical illness. Known serious issues in your family’s medical history can increase the premiums by 50% to 250%.
4. Ladies, you rock: Female policyholders pay on average 25% less than male policyholders. Changing your gender will not really help – insurers consider the gender you were born with.
5. Smoking impacts your health and insurance rates: Stop smoking well in advance (at least a year) before applying for a policy – otherwise your premiums will double. Like cigars? Well, many life insurance companies consider smoking more than 1 cigar per month and you won’t be able to get non-smoker rates.
6. Great medical record drives savings: Having a healthy medical history in the past (not equal to the good current health state in the moment of application) has impact on your life insurance. If you’ve had serious issues, some potential disease cases can be excluded from your coverage.
7. Stay Happy – otherwise it can become really expensive: Mental health matters – those with a history of depressions pay between 50% and 200% more.
8. Don’t drink excessively and reduce your low insurance rates: If you do not have any drinking issues, you can benefit from lower insurance rates – otherwise your premiums can increase by up to 50%. An intensive drinker would be considered somebody who drinks 3-4 beers a day.
9. Rounding mathematics matters: If you decide to buy a life insurance policy, make sure that your age rounds down and not up, i.e. if you are going to be 30 years old on December 31, buy the policy in the first 6 months of the year where your age is still rounded down to 29 and not 30.
10. Backdating your policy: That’s one of the interesting ways to lower your premiums similar to the situation described in the previous point. You can actually backdate your policy locking into an earlier age and rates bracket. You will need to pay some premiums starting from the new backdated date but it will impact all your future premiums. Sometimes that can save you up to 10% in annual premiums.
11. Driving safe, save on life insurance: Ensure you have a good driving record before applying – a bad driving record is punished by life insurance provider (as by auto insurers) – your premiums will go up by extra 25-50%.
12. Insurance type matters: Term insurance products have lower than initial premiums than Whole Life or Universal Life. So, if you are looking to maximize your initial coverage, choose Term.
13: Insurance length matters: You surely knew that: In general the longer your policy is, the more expensive it becomes since the chances that something happens to you are higher.
14. Got a solid group policy from your employer? Bingo! Group Life Insurance can be an alternative to your Personal Life insurance if your employer offers sufficient coverage – at least you are protected as long as you work for the company. On the downside the coverage ends when you leave your company.
15. Say no to guaranteed issue life policy: People with good health do not need a guaranteed issue life insurance policy (these are policies that do not require a medical exam but they cost more) – do a health check / exam and enjoy lower life insurance premiums.
16. Dream job can mean higher life insurance premiums: Not being involved into dangerous jobs like a member of the police bomb squad will help to avoid additional insurance premiums.
17. Coverage amount matters: Make sure that you are not taking more insurance coverage (but also not less) than needed: perhaps $1,000,000 is enough – ask yourself and your insurance advisor if you really need $2,000,000?
18. Time goes by, driving offenses disappear (almost): If your driving record improved while you have a life insurance policy, you can review your premiums with your insurer and get them reduced (typical time for smaller offenses to come off your driving record is 3 years).
19. Did you know about a family or JFTD (joint-first-to-die) policy: You can get one policy for both your spouse and you – it will be often cheaper than two single life insurance policies.
20. Meet multi-life discount: This option is quite similar to the previous one but you still get two separate policies whereas one of them will have a significant discount.
21. Get rid of unnecessary riders: Check additional riders offered with a life policy to decide if you need them e.g. Accident death benefit (higher payouts in case of death through an accident), term conversion rider (in case you want convert your Universal policy into Term).
22. Smoked in the past but stopped? Cash out!: If you have a policy which you got when you were a smoker, stopping smoking and demonstrating to your insurer that you have not returned to it for at least 1 year will reduce your insurance premiums. Smokers typically pay double amount of premiums!
23. Got in shape recently? Cash out!: If you already have a life insurance policy and got in shape compared to your state when you signed up for a policy (e.g. spending hours in a gym), you can request a review of your life insurance premiums.
24. Stopped drinking? Cash out!: Similar story with drinking – demonstrate that you had one year of no drinking and it will be reflected in your adjusted premiums for an existing life insurance policy.
25. Compare premiums – there are plenty of companies out there: There are over thirty life insurance companies there – get the quotes from several providers and you will be surprised about price difference.
26. Insurance broker can often get better rates: How often would you cook something without a cooking book? Similar case with a life insurance broker. Home insurance and especially auto insurance are commodities and can be often got directly from the provider, life insurance has many underwater stones and little-known aspects. Life insurance broker can navigate through them and often get lower rate than you would get on your own (e.g. because brokers may have some air to offer discounts on insurance products due to the large insurance volumes they make)
27. Avoid insurance agents: Insurance agent is not equal to insurance broker. Agents typically work for one company only and can offer only products of this company. That does not leave too many options.
28. Bundles can be cheaper: Getting several insurance products from one provider e.g. Life insurance together with Disability Insurance and Critical Illness can be often rewarded by lower premiums. Or you can sometimes bundle Life insurance with Non-Life insurance (e.g. Home or Auto) – that depends from insurance provider.
29. Got Life, Disability and Critical Illness? Cancel Mortgage insurance: Mortgage insurance is a fascinating product created by money lenders. Simply said, it is a different name of Life, Disability and Critical Illness insurance policy associated with payments for your mortgage. Got a mortgage of $500k together with mortgage insurance for that? Well, if you have a Life policy large enough, you can save yourself mortgage insurance.
30. Member of something? Some insurers reward it: Are you a member of a professional organization (e.g. Certified Management Accountants of Canada or The Air Canada Pilots Association)? Then some insurance companies will offer you a discount e.g. Meloche Monnex
31. Explore Return of Premiums conditions: Some policies allow getting back the part of the premiums if you have not made use of them – ask your broker to make the calculation for you. Slightly higher premiums upfront can make sense in case of later premiums returns.
32. Cancer cases are treated differently: Insurance companies treat cancer cases differently (often considering it high-risk insurance) – talking to a broker, who knows that field well, can save a lot.
33. High blood pressure cases can mean different premiums with different insurers: Typically high-blood pressure leads to higher insurance premiums but various life insurance providers treat and price those cases differently. Often any blood pressure exceeding 140/90 can trigger higher premiums. Some insurance brokers know those cases better and will be able to navigate you to the company with better rates.
34. Diabetics is not easy to ensure but not impossible: Many companies will not cover you but some will and again you’d better to rely on a broker who has experience in this field and can help to get insurance and optimize premiums.
35. Alumni: Graduates from certain Canadian universities (e.g York University) might be eligible for a discount at certain Insurance providers
36. Annual vs. monthly payments: In comparison to monthly payments, annual payments save insurers administrative costs (e.g. sending bills) and therefore they may reward you with lower premiums.
37. Use other peoples info as references: Knowing how much other consumers similar to you pay for their insurance can help you identify the most cost-friendly insurance providers. e.g. using Insurance Price Comparison to compare insurance premiums to your peers.
38. Pay attention to consumer reviews: Spending some time upfront to read other consumers’ opinions about insurance providers can save you a lot of money later, both in premium increases and claims cases. InsurEye Consumer Experience Tool is an independent and free platform for consumer insurance reviews.
39. Annual review: Review your policies and coverage every year, since new discounts could apply to your new life situation if it has changed. An example would be your growth of your kid (and as a consequence less funds that you need to keep as reserves) or complete payout of your mortgage.
40. Employee / Union members: Some companies offer discounts to union members ( e.g. IBM Canada or Research in Motion)
Chantal Marr is a licensed life insurance broker and a head of LSM insurance, one of few insurance brokerages working nearly all life insurance providers and offering life insurance across all Canadian provinces.She is a member of the Independent Financial Brokers of Canada. Much of her success stems from her ability to listen to her clients’ needs. If you are interested to find out more about Life Insurance Savings and connect with Chantal for a free quote / assessment of your situation, please complete and submit the small form on the left.
InsurEye Inc. is a Canadian company that provides online tools for consumers to educate them about insurance and create transparency in insurance market place in Canada.
Insurance Price Comparison Tool is based on aggregated consumer data and helps to compare your insurance premiums to the premiums paid by your peers.
InsurEye Consumer Experience Tool is an independent platform for consumer insurance reviews. It covers most home, auto, and life insurers and their products across the country and is free for Canadians to use.