A life insurance policy covers your family or and loved ones, paying them a lump sum amount if you die. Insurance providers also pay this money if you are suffering from a terminal illness, and have less than 12 months to live. Obviously, you have to pay premiums for this during your life time. But in turn, you can ascertain that your loved ones will be protected and their financial future will be secure when you aren’t around to support them anymore.
A study found that 20% of parents either pass away early or are too ill to work. Despite being a needed essentiality, 95% of Australians are inadequately insured. Though there can be many reasons for this, one of them is the premiums. Many of you may find it difficult to budget for them considering the high rates, but there are so many ways with which you can reduce your premiums. Let’s take a look at some of the most effective strategies.
Contact your current provider
If you already have life insurance, you should begin by contacting your current provider. Ask them to reduce the sum that is insured, which will bring a notable reduction in your premiums.
This is a really effective way to ensure that you are paying the lowest possible premiums. Instead of signing up with the first insurance provider that you come across, search the market and get quotes from various insurance providers. Click here to get some quick estimates.
Talk to an insurance consultant, and they will help you in comparing different policy options and highlighting the differences from one to another.
Adjust your policy
If you adjust your policy and reduce your coverage, you will have to pay a lower amount in premiums.
Consolidate super funds together
Super funds are opened by several providers and accumulate as time passes. Some of these may offer some kind of life coverage. If you combine all of these together, you can save a lot in terms of fee payments and premiums.
Consider the premium structure
The premium structure you choose affects your insurance rates. Generally, insurance providers offer a choice from stepped, level and hybrid premiums. With stepped premiums, you pay a smaller amount initially, but premiums rise later on, which may make this an expensive option, especially if you are over 50. So stepped premiums are generally more preferable if you are young.
Level premiums are determined using your age when you apply for a policy, and then they remain the same. In the long run, they are usually more expensive than stepped premiums, but they are still a good choice if you expect your income to be lower later on in life, and want to save money then.
Hybrid premiums are a combination of stepped and level premiums. Premiums increase until you reach a certain age, and then become constant; this age is usually determined in the contract. They are suitable for someone who can pay some more now in order to save money later.