How To Lose Debt

Many companies subsidize or even cover life insurance premiums. So you could reduce this expense significantly by simply getting a job at one of those companies. However, if you are one of the unlucky ones who have to pay for life insurance because you are self-employed, like I am at the moment, then there are some things you can do to reduce this expense.

Life insurance companies use all kinds of data to determine what premium they will charge when they are taking the risk of insuring you. Factors like family history, whether you smoke or have ever smoked, age, sex, etc. Most of these items you have no control over at any point in time. For example, if you smoke, you could and should stop smoking; however you cannot remove the fact that you smoked 20 years ago. So, for the purpose of this discussion I am not going to talk about trying to change the things you have no control over, like your age.

There are a couple of major factors that come into play when dealing with life insurance premiums. The first is so obvious that I probably do not even need to point it out, which is the amount of the life insurance benefit. Do not buy more insurance than you need to take care of your loved ones should you pass away. The second is the term. How long will the policy remain in force at the current premium rate? The longer the term, the higher the cost of the premium. Why? It increases the risk that the insurance company will actually have to pay the benefit to someone during the term! Ya think?

I am covering “term” life insurance here. There are other policy types like “whole life” where part of your premiums actually builds cash value. But they are almost always more expensive than term life insurance premium rates, so I will not cover them here. The shorter the term, the less the premium.

Now, there is a downside to shorter terms. The first is that at the expiration of the term, you will need to go out onto the life insurance market and buy another policy. As you will be older, and possibly even in not-so-good medical condition, the rates will be higher, and it’s possible that you will be uninsurable at any given point. The other downside is that you paid a significant amount of money for coverage all those years, and at the expiration of the term you have nothing to show for the money spent.

Determine what term is right for you based on your age, your medical condition, the amount of premium you can afford, etc. There is no one-size-fits-all here. I would recommend that the term be at least 10 years, preferably longer if you are older. Once again, the premium goes up as the term increases, so it’s often a case of how much you can afford to pay. Ten years seems to be a reasonable length of time to still get a good rate and to lock in your premium amount. Your situation changes over time, also. As you grow to lose debt, celebrate yourself, you may not even need the coverage any more to take care of your loved ones!!

Finally as I said before, age, sex, family medical history, HIV positive, all kinds of factors come into play here when a life insurance company is calculating your personal premium rate; most you have absolutely no control over. Think about it; the insurance company is betting that you will outlive your policy term and they will never have to pay out the benefit on the policy. You, as morbid as it sounds, are betting against the life insurance company, that you will pass away during the term of the policy, and the company will have to pay your loved ones the policy’s benefit amount. Crazy, isn’t it?

There is one factor, other than the policy amount and term, that you have some control over. Well most people do, and that is your weight. Your weight/height ratio is used when determining the amount of the life insurance premium!! What is amazing is it plays a significant role, actually. If you don’t believe me, go to an insurance broker’s website, there are many, like IntelliQuote http://www.intelliquote.com and play around with your weight, keeping all of the other factors the same, like amount, age, term, etc. See how the premium fluctuates!! You will be amazed!!

When you get to the obese area for your particular height/weight ratio, you will even see companies drop out of offering coverage, and other, less stable companies enter the picture. Remember, a life insurance policy is simply a contract between you and your insurance company. Contracts are only as good as the person/company that enters into the contract. All life insurance contracts’ benefit payouts are contingent on the financial stability and claim-paying ability of the life insurance company, so choose wisely. Then lose weight before applying for insurance!

As I covered in the car insurance section, you could potentially get a reduced life insurance rate if you bundled your life, homeowners, auto or other insurance needs together with a single company.