More on Life Insurance
More on Life Insurance
Keeping up with your goals could earn you more than bragging rights. Here’s how some of the most common resolutions can improve your life insurance policy too.
Research shows that fewer than 10% of adults actually maintain their New Year’s resolutions for more than a few months. Add the bonus of a year defined by the COVID-19 pandemic and you might feel like the only resolution worth making in 2021 is to get through it.
But, if you stay strong and stick to your goals this year, you could reap the benefits far into the future and financially protect your loved ones in the process. Here’s how some of the New Year’s resolutions you’ve already made can save you money on life insurance in the long run.
New Year’s goals that improve your mental or physical health can save you money on your policy
Improving your finances or finding an employer with better benefits can also earn you lower premiums
You’ll need to maintain any changes for a year or more to prove consistent improvement to providers
Look at any advertisements ahead of the new year and it’s plain that getting fit, eating better, and losing weight are among the most common resolutions every December. The good news is, if you can maintain these healthier habits long-term, then you could see life insurance savings even if you already own a policy.
Exercising and eating better may lower your weight, which life insurance companies factor into calculating your policy premium. If you have an existing policy, you can reapply and receive a lower premium if you maintain a lower weight for a year or more. And keeping up your healthy habits will lead to better health as you age, meaning more affordable premiums if you need to buy a new policy when you’re older.
That said, we don’t recommend picking up any of the extreme or restrictive diets commonly advertised around the holiday season. Not only can these have negative side effects or long-term consequences, the results are often short-lived and thus the opposite of what insurers want to see.
It’s no secret that excessive drinking and a smoking habit aren’t great for your body. But, because insurance providers will raise your premiums for both, you can lower your life insurance costs significantly by sticking to a resolution to quit.
The key is that it’s about sticking to your resolutions — committing to doing a Dry January isn’t enough to sway an insurance underwriter, and a lot of providers will still treat you like a smoker if you’re using nicotine patches or gum to wean off of a tobacco habit. “My advice,” says Policygenius senior sales associate Carlos Oyaga, “is to get covered today and look to reapply or reconsider in the next couple of years, since insurance providers will still want to see consistency (for months or years).” Power through for 12-24 months or more and you could receive more favorable premiums after you’ve successfully quit.
Holiday celebrations and gifting at the end of the year can derail even the most careful person’s monthly budget, and January is as good a time as any to make a new savings plan. And if you get your financial strategy in order, you’ll be able to get on a life insurance company’s good side too.
Life insurance companies consider your credit score and financial missteps like regularly missing bill payments when they look at your application. If you have an unstable financial history, you may not be approved for all the coverage you need, so it’s best to get back on track as soon as possible. Plus, if you save and invest now, you could eventually set aside enough for your loved ones so that you won’t need life insurance to give your family the right amount of financial support.
No matter why you might want to leave your job in the new year, your total compensation package can make your life insurance plan even more affordable. A higher salary will help your overall finances, but if your new employer’s group life insurance policy offers more coverage, you could reduce your private life insurance policy’s death benefit and have even more money to save.
This is one resolution you definitely need to keep for more than a few months if you want to sustain those savings. You can’t take your group life insurance with you if you end up leaving your new employer.
If you’re hoping to find some internal calm in 2021, the steps you take to treat your mental health could also take some pressure off of your life insurance budget.
If you have a mental health diagnosis, seeking treatment through therapy, medication, or both looks better to insurance underwriters and could earn you better prices. Even in non-clinical cases, finding a routine or practice that makes you feel at peace could reduce physical manifestations of depression or anxiety like lack of sleep, lack of exercise, or unhealthy eating habits, all of which affect your life insurance premiums.
No matter your plans for the new year, it’s important to buy life insurance coverage sooner to protect against worst-case scenarios. “Despite resolutions to lose weight, stop smoking, you name it, we never know what tomorrow will bring,” says Oyaga. It’s better to have protection now and reduce your premiums later if you can. And if you stick to your resolutions, the potential benefits to your health and well-being, your finances, and even your life insurance coverage can set you up for success this year and for many years to come.
Insurance underwriters price your policy based on your health and lifestyle. If your goals for next year will improve your health or finances, life insurance companies could offer you lower rates.
It’s safest to get coverage as soon as possible, even if your health or lifestyle might make your policy more expensive while you’re making changes. Buy a policy now to ensure your loved ones are protected and reapply or ask for reconsideration for lower premiums in the future.
If you don’t keep your resolutions, your life insurance premiums won’t improve. Underwriters generally want to see health and lifestyle changes maintained for a year or more before they’ll consider offering you lower premiums.
Amanda Shih is a life insurance editor at Policygenius in New York City. She has a passion for making complex topics relatable and understandable, and has been writing about insurance since 2017 with specialities in life insurance cost and policy types. She's previously written for Jetty and LegalZoom.
Amanda has a B.A. in literature and communication from New York University.