There are many factors
That life insurance companies take into consideration when calculating your premiums. Age barely scratches the surface; actuaries take into account your geographical location, your current health condition, your family's historical health background, the amount of coverage you desire and the type of policy all factor in to concluding with your cost of insurance.
Believe it or not, your lifestyle affects your premiums
Among the many factors, the many elements, your lifestyle is the most subjective unit of the calculation since this covers not only your smoking status, but your activities and your hobbies as well. Enthusiasts of extreme sports (scuba diving, skydiving, bungee jumping, etc.) for example, should expect higher premiums than those that do not participate in those activities. However, those that do not partake in any sport at all are also expected to pay more than those that do keep up their physical health. It is a very broad and both subjective and relative variable filled with many aspects that actuaries must consider.
Lower your insurance costs is one of the most sought-after answers in the insurance-industry, all clients have that relative common ground of desiring a lower premium than those around them.
"How much do you pay for your coverage?"
"Really? I only pay ______!"
There are many ways you can lower your insurance policy, but the most creative and effective ideas requires some work on your part. But, it becomes all worth it when you imagine freeing up some money in your monthly budget. Because many everyone likes the idea lower, cheaper premiums, because everyone likes the idea of paying less, here's 10 clever ways of lowering your disability insurance cost.
- Choosing a longer elimination period - opting for a longer elimination period lowers your insurance premiums because there is a longer period of self-insurance by the client. It is one of the easiest ways to decreasing your premiums. However, since insurance companies have discovered this, the common 30-day elimination period that is used by a lot of companies have now increased to a 90-day elimination period. That means, this approach greatly benefits those that can safely increase their elimination period to 180-days. For those with an emergency fund, this method is the most beneficial to you. A common emergency fund covers 9-12 months in the event of loss-of-income and therefore, should comfortably carry you through the 6 months of waiting.
- Choose a shorter benefit period - Don't purchase anything more than you need. That's the rule of thumb we all know when striving for efficiency. In regards to disability insurance, many follow the advise to buy as long a benefit period as you can afford. However, research suggests that you may not need more than 5 years of disability insurance since most long-term disabilities commonly lasts a maximum of 4 years and some not even longer than 2. So opting for that 5-year benefit period may be more efficient and will save money in your pocket. Analyst say you may be able to save up up to 30% of the premium cost by doing so.
- Choose a step-rate plan - a step-rate policy is a disability policy whose premiums are low initially and increases over the coverage. The benefit of settling for a step-rate plan is that it provides great quality benefit for a relatively cheaper rate. If used wisely, a step-rate plan can save you loads of your income.
- Discover loss-of-income policy - not many know about the cheaper disability insurance called loss-of-income policy. It is a disability coverage based on loss of income instead of being defined as the more expensive own occupation. This type of policy (loss-of-income) lessens the risk by the insurers since they only give you the benefit in proportion to the income you lost.
- Lock it in early - A common misconception by young people is that they often act as if they're invincible and hate considering the event of a disability. Since attained age is one of the key variables of finding out premiums, neglecting the risk of disability becomes very costly in the future. The older one becomes the more expensive their coverage becomes, and therefore, it only makes sense to "lock it in early" and purchase a policy as soon as possible. Time is positively correlated to increasing premiums.
- Consider bundling - If you already have an active policy with an insurer, inquire about what other insurance policies you can purchase in a bundle. This is a common method for insurance companies to retain their customers by offering 2 or more policies at cheaper rates than their individual, standalone versions.
- Making annual payments instead of monthly - another common incentive insurance companies give their customers is to purchase a cheaper rate annually than the monthly premiums. This is because all business want more cash at hand. That is because they can implement future plans faster and earlier than waiting for an accumulation of funds later. It helps you, it helps them.
- Don't Go Overboard in Lowering Your Premiums - Remember that you get what you pay for. You have insurance for a reason, and if your policy only boasts cheap rates and nothing else, you coverage may not cover your problems due to exclusions on fine print. In that case, you would have wasted the premiums you paid.
- Show Insurers You Are Safe - Persuade low risks of covering you to your insurance provider. And that goes for both your health and your activities.
- Think Long-Run - Think long-run. You may not need disability insurance for longer than you think. So purchasing an extremely long benefit period may only decrease your back for your buck.
Want better and more clever ideas to reduce your premiums? Visit lifeinsurancearticles.com for 27 more brilliant ideas to get cheaper insurance premiums!