How to lower the cost of your life insurance premiums

There are a few ways to save money on life insurance, whether you're shopping for the first time or already have a policy.

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Nupur GambhirSenior Editor & Licensed Life Insurance ExpertNupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

Updated|4 min read

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Life insurance rates are generally affordable, especially for term coverage. But most people wonder how to save money on life insurance; they want to ensure that they are getting the most coverage possible for the least amount of premium. There are some simple ways to lower your premiums, whether you're shopping for the first time or already own a policy.

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Save on life insurance when buying a new policy

When shopping for a new life insurance policy, there are several ways to save money on insurance premiums:

1. Buy life insurance as soon as you need it 

As soon as you know you need life insurance, you should buy in order to lock-in lower life insurance premiums . The average cost of life insurance will increase 4.5 to 9% every year as you age. When you apply and buy when you’re young and healthy, you can lock-in those lower rates and save yourself a lot of money over the term of your policy. 

2. Shop the market 

Each life insurance company prices their coverage based on their own underwriting criteria, and that means that the price for the same coverage can vary widely from company to company. When you work with a marketplace like Policygenius to find and buy insurance, experienced agents help you choose the company that is friendliest to your personal profile, ensuring that you get your best price. Some insurers, for example, offer better rates for people with diabetes, or people who have a history of cancer, or people who have had mental health diagnoses.

3. Choose term life insurance 

The easiest way to save money when buying life insurance is to choose a term life insurance policy instead of a permanent life insurance policy. Permanent life insurance costs five to 15 times more than term life insurance. Term life insurance is simple insurance: you pay premiums for a set term, and if you die during that term, your beneficiaries get a set death benefit. Permanent policies are more complex financial products that can be useful for complex situations (like if you have complex estate planning needs). But most people need term life insurance. 

4. Lower the face value and/or the term length of the policy 

If you apply for a policy that delivers your ideal coverage, but your rates come back too high, you can lower the death benefit and/or the term length of the policy in order to lower the cost of your premiums. Your agent can help you find a sweet spot with the most coverage and longest term possible at a premium you can afford. 

5. Opt to pay your premiums annually

By paying your life insurance premiums annually instead of monthly, you can sometimes save up to 5% on how much you pay.

Lower your current life insurance premiums

If you already own a life insurance policy, there are three things you can do to reduce your life insurance premiums:

1. Improve your health, then ask for reconsideration

Your life insurance rates rise as you age, but if you improve your health in the year (or more) after you buy your policy, you may be able to actually lower your rates. Reconsideration, also called rate reduction or re-rating, is when you ask your insurer to look at updated medical records and medical exam results to lower your rate. 

You can contact your insurance company to ask for reconsideration once you've owned your policy one year. You’ll have to take a new life insurance medical exam, and they’ll also want to see at least one year of progression in your health records from the time your policy was active. 

For some some conditions and hobbies, you may want to wait even longer to ask for reconsideration. For example, smokers pay a lot more than nonsmokers for life insurance. The further away you get from your last cigarette, the higher the likelihood that you’ll receive a lower life insurance rate. Generally, life insurance companies will consider you a nonsmoker five years after you’ve successfully quit smoking, though each life insurance company has their own guidelines.

If you apply for reconsideration and your insurer declines to give you a lower rate on your policy, you’re still covered by them at the same rates that you were paying before. They won’t increase your rates or cancel your policy. But if you still want lower rates, you can apply for a new life insurance policy with a different insurer to see if you can find lower rates elsewhere.

2. Re-shop your policy 

While you’re applying for reconsideration with your current insurer, it may also make sense to re-shop the market for your policy. Your improved health condition could mean that you’d be eligible for an even lower rate from another insurer. 

If you haven’t improved your health since you first applied, it likely doesn't make sense to ask for reconsideration, but it still might save you money to re-shop for life insurance, especially if you didn’t shop the market when you purchased your policy.  It’s possible there’s an insurer who is friendlier to your health profile than your current insurer is. 

3. Reduce your coverage amount 

If you’ve had your policy for at least one year, you may be able to ask your insurer to lower the coverage amount of your policy, which would in turn lower your premiums. This obviously is not ideal: you bought the coverage you have because you need that coverage. But if you are considering forfeiting your policy unless you can lower your premiums, this could be a good way to keep some coverage. 

Frequently asked questions

How can I get lower life insurance rates?

You can get lower life insurance rates by comparing quotes from multiple insurers, improving your health, or lowering your coverage.

What is reconsideration?

Reconsideration is when your insurer offers you new, lower rates because your health has improved. You can only get new rates after owning the policy for over a year.

What is reapplication?

Reapplication is when you apply for a new life insurance policy from a different insurer so you can get lower life insurance rates.