5 Ways To Reduce Your Life Insurance Premium

If you have a life insurance policy and are struggling to pay your premiums — or you’re browsing to sign up for an affordable policy — there are options to help reduce your monthly payments and make sure your policy fits into your budget.

Lindsey Crossmier, writer for RetireGuide
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APA Crossmier, L. (2022, May 4). 5 Ways To Reduce Your Life Insurance Premium. RetireGuide.com. Retrieved May 25, 2022, from https://www.retireguide.com/life-insurance/cost/premium/5-ways-to-reduce-your-life-insurance-premium/

MLA Crossmier, Lindsey. "5 Ways To Reduce Your Life Insurance Premium." RetireGuide.com, 4 May 2022, https://www.retireguide.com/life-insurance/cost/premium/5-ways-to-reduce-your-life-insurance-premium/.

Chicago Crossmier, Lindsey. "5 Ways To Reduce Your Life Insurance Premium." RetireGuide.com. Last modified May 4, 2022. https://www.retireguide.com/life-insurance/cost/premium/5-ways-to-reduce-your-life-insurance-premium/.

Life insurance is a legal contract between a policyholder and an insurance company that pays a death benefit to a designated beneficiary or beneficiaries after the insured passes. You, as the policyholder, pay a premium to the insurance company ‌for the coverage.

New research from the Life Insurance Marketing and Research Association (LIMRA) shows that life insurance ownership has declined, with only 52% of the American population opting for coverage in 2021. Meanwhile, most people without coverage overestimated the true cost of life insurance, inflating predicted premium costs by three times or more. In reality, life insurance companies can charge as little as around $15 a month for some individuals.

Premium prices vary widely, but knowing how to get the lowest possible price can help you avoid overpaying.

How Can You Reduce Your Premium?

A few strategies can help you get a lower monthly premium — buying while you’re young, choosing term life insurance, avoiding adding unnecessary riders, having a healthy lifestyle and comparing quotes.

There are additional options if you find you can’t reduce your premium enough to afford it, including grace periods, waivers and opportunities to alter your coverage.

Explore these strategies to gain the peace of mind that you’re saving money by getting the best premium price available to you.

Buy While You’re Young

The younger you are, the cheaper your premiums for life insurance will be. Life insurance premium prices often get more costly after you turn 60, even as much as tripling in price. For example, the same policy can cost $34.00 monthly for a 50-year-old female and $95.00 monthly for a 60-year-old female.

Meanwhile, if you sign up for a life insurance policy when you’re in your 20s or 30s — and lock in low premiums for years to come — your premium could be as low as around $16 each month.

Choose Term Life Insurance

Term life insurance is the most affordable policy when compared to permanent life insurance because it covers you for a set period rather than for your lifetime. Term life coverage is commonly offered in increments of 10, 20 or 30 years. Each insurance provider offers different term lengths within the range.

The longer the term length, the higher your premium will be. In 2022, a 20-year term policy is typically 40% more expensive than a 10-year policy — but it also doubles your length of coverage. Consider how much coverage you need for your current lifestyle and health, but keep term length down for the lowest possible premium.

Don’t Add Unnecessary Riders

Insurance riders are customizable, add-on options to policies for extra coverage. Though some insurance companies offer riders for free, most riders increase your premium price.

Common Rider Options
  • Accelerated death benefits rider
  • Child rider
  • Waiver of premium rider
  • Term conversion rider

Although extra coverage can come in handy, avoiding adding riders will help you get the most affordable premium.

Compare Insurance Quotes

Most insurance companies offer online quote tools for free. Comparing quotes is an important step to ensure low premium costs. If there is no quote tool available online, an insurance broker can provide you with policy options and costs.

There can be a wide range of premium prices between different insurance companies, even if you’re signing up for the same policy.

For example, both insurance quotes in the charts below are based on a term policy with $500,000 of coverage for a 20-year term length. The quotes represent a preferred plus rate for a healthy candidate.

Foresters Financial Quote
​​AgeHealthy Female
40$37.35
50$91.80
AIG Direct Quote
AgeHealthy Female
40$25.65
50$57.00
Source: AIG Direct

There is a $34.80 difference in premium prices for a policy with the same terms for a 50-year-old woman.

Use comparison tools to ensure you’re getting the lowest possible premium. Remember that your age and other factors will fluctuate your price.

Lead a Healthy Lifestyle

Living a healthy lifestyle will help you get lower preferred plus rates for your premium. Several lifestyle factors can increase your premium price.

Lifestyle Factors That Increase Your Premium
  • Dangerous hobbies or job
  • Being overweight
  • Smoking and drinking
  • Driving record
  • Overall health

Some aspects that increase your premium, like your age, can’t be controlled. However, many lifestyle factors can be managed. For example, if you have a dangerous hobby, like rock climbing, you may choose to switch to a safer option to avoid a higher premium.

Healthy Lifestyle Options To Help Lower Your Premium
  • Quit smoking
  • Limit drinking
  • Practice safe driving habits
  • Eat healthy and nutritious foods
  • Attend regular doctor checkups to catch illnesses early
  • Choose safer hobby options

If you’re uncertain how your lifestyle will affect your premium price, you can contact a licensed agent to discuss the best options. All policies vary in coverage options and price, so it’s best practice to get professional guidance for your specific needs.

What Are Your Options If You Can’t Pay?

If you don’t pay your premium, most policies have a 30- or 31-day grace period in which you won’t be charged interest for a late payment and will remain covered. Even if you pass away during the grace period, your beneficiary will still receive the death benefit (minus the missing premium payment.)

Although you should typically avoid adding riders to your policy to keep premiums low, adding a waiver of premium rider could be beneficial if you can’t afford your premiums after becoming disabled, critically ill or becoming unemployed. Terms surrounding use of this rider vary with each insurance company. There is also usually a six-month waiting period before you can elect to have premiums waived, which is past the 31-day grace period for most policies.

Adjusting the death benefit of your coverage is another solution to lowering your premium if you can’t afford the current cost. For example, you could lower a $500,000 death benefit to $250,000. Confirm whether your insurance provider will base your new premium price on your current age or the age you were when you first signed up for the policy.

What Happens If You Stop Paying?

Consequences for missing a premium payment depend on your type of policy, along with the terms and conditions you agreed to when signing up for the policy. Typically, for a term life insurance policy, your coverage will lapse and could be canceled.

However, reinstating your policy can often be done with a phone call to your insurance provider when you can afford to catch up with your missed premiums. Most insurance companies allow up to five years to reinstate a lapsed policy. You’ll likely have to answer a health questionnaire or undergo a new medical exam to update your health information if years have passed.

Your insurance company can also charge interest on missed premiums if you’ve surpassed the 31-day grace period.

Last Modified: May 4, 2022

7 Cited Research Articles

  1. Anderson, T. (2022, April 7). 5 Things You Should Know About The Waiver Of Premium Rider. Retrieved from https://havenlife.com/blog/waiver-of-premium-rider/
  2. Martin, A. (2021, June 18). What Happens if You Stop Paying Life Insurance Premiums? Retrieved from https://www.experian.com/blogs/ask-experian/what-happens-if-you-stop-paying-life-insurance-premiums/
  3. Harris, T. et al. (2021, June 4). Did COVID-19 Change Life Insurance Offerings? Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8242708/
  4. LIMRA. (2021). 2021 Insurance Barometer Study. Retrieved from https://www.limra.com/en/research/research-abstracts-public/2021/2021-insurance-barometer-study/
  5. Foresters Financial. (2017). Life Insurance. Retrieved from https://www.foresters.com/en/financial-solutions/life-insurance#gref
  6. AIG Direct. (n.d.). Life Insurance Tools. Retrieved from https://www.aigdirect.com/tools
  7. Office of Public Insurance Counsel. (n.d.). Life Insurance. Retrieved from opic.texas.gov/life-insurance/rights/