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Of all the options available, term life insurance is the most affordable type of life insurance. This is because it is a no-frills option geared towards people who are young and in good health.

Even still, term life insurance rates vary greatly from person to person and you’re not guaranteed the most affordable premium. Insurers will use multiple factors to determine how much you pay for coverage — your age, health, lifestyle choices, and smoking status are amongst the most important factors.

While some of these factors are out of your control, there are still steps you can take to get the most affordable rate for your profile. Shopping around and comparing quotes is one of the most immediate steps you can take to get the best possible premium. Alongside this, only getting as much coverage as you need ensures you’re not over paying for your term life insurance policy. 

There are other steps you can take to lower the cost of your premiums as well.

Shop around

Shopping around and compare quotes from different insurance providers is one of the most effective ways to get the best possible rate for term life insurance. 

Each insurer has its own underwriting guidelines and pricing structures, so while one insurer may give you the best possible rate, another may charge you more. While it’s best to compare quotes from at least three to five insurers, working with an independent broker or life insurance agent will enable you to find the cheapest quote from a broad spectrum of insurers. 

Get the right amount of coverage

Term life insurance offers coverage for a specified period. When you’re purchasing a policy, you get to choose how long your policy’s term is. Term lengths can be as low as 5-years and can be as long as 40-years. 

Selecting the right term length is crucial. If you choose a longer term than you need, you’ll pay higher premiums. Likewise, if you select a term that’s too short, you may need to reapply for coverage later. The cost of life insurance increases with age and as you develop health conditions, so purchasing a new policy later will likely mean higher premiums. 

You’ll also want to get the coverage amount. While it’s essential to provide adequate financial protection for your beneficiaries, getting too much coverage could lead to overpaying in premiums.

To get ensure you’re getting the right amount of coverage, tally up your financial obligations and how long they last. Your coverage should last as long as your longest financial obligation and your term life insurance policy’s death benefit should be as high as the sum of those obligations, if not a little bit more for a financial cushion.

Get coverage as soon as possible

Life insurance rates increase with age, so the sooner you buy a policy, the less you’ll pay. Insurance companies charge more for older applicants because as you age, you are at a higher risk of dying.

Waiting to buy coverage also risks developing any new health conditions that come with age. Healthier applicants receive much better premiums than those who are not in good health. 

Pay annually rather than monthly

When you pay your life insurance premiums annually, many insurance companies will offer you a small discount. Insurance companies often offer this discount because annual payments reduce administrative costs for the company. The exact amount discounted varies from insurer to insurer, and some insurers may not offer it.

When you’re setting up your policy, it’s worth asking how much of a discount you can receive if you pay your premiums annually rather than monthly. If any discount is offered, you can save a lot on premiums over the course of your policy. 

Improve your health

While a few days of healthy eating won’t change much for your application, you should still work on improving your health as soon as you start thinking about buying coverage. Months of healthy habits can show up on a life insurance medical exam if you’ve reached a healthy weight or lowered your blood pressure. The better your health — the lower the rates. 

If you don’t get the rates you’d hoped for when you apply because of your health, you’re not necessarily stuck with that premium for the entire policy. Many insurance companies offer rate reconsideration. After one or two years of owning your policy you can apply for a rate consideration if you’ve improved your health or quit smoking. You’ll go through the medical exam again so that the insurance company can evaluate if your health has improved and what your new premium should be. 

While it is possible the insurance company won’t offer you a lower rate after the reconsideration process, you don’t need to worry about receiving an even higher rate than before. Insurers will never change your rate if the medical exam shows that it should be higher.

Quit smoking

Smokers pay significantly more for coverage than nonsmokers. By quitting smoking, you can receive much cheaper premiums and save thousands of dollars over the course of your term life insurance policy.

You’ll need to quit far in advance of purchasing a policy, however. Insurers won’t lower your rates if you’ve just quit smoking — which they can determine from the medical exam.

Term life insurance rates are generally more affordable than all other types of life insurance — but there are ways to get rates even lower. By taking steps such as shopping around and getting coverage when you’re young, you can save thousands of dollars over the course of your term life insurance policy.

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