How to Lower Your Life Insurance Premiums

I’m always going to tell you this: insurance isn’t a negotiation. The insurer reviews your file and makes an offer (standard, preferred or rated, sometimes with an exclusion), and that offer is the premium.

So the savings don’t come from haggling after the offer. They come from what goes into the application, and where it gets sent. I work with nearly 20 insurers and they don’t all assess the same way, which is the real reason to compare life insurance across insurers before you apply to one directly.

Standard rates, based on current carrier rates, illustrative only, subject to underwriting and change.

What Sets Your Life Insurance Premium (and Which Parts You Control)

The one thing a client can’t control is family history. Your premium is set from that plus your age, sex, health readings, nicotine use, job and hobbies, and then from what you choose to buy: the amount, the term, the type of policy and the insurer.

Your own blood pressure and cholesterol are what they are on the day you apply. I mean, it’s not to say they can’t change or improve. But laid out honestly, more of the list is yours than most people think.

Want the full price picture by age and amount? How much life insurance costs in Canada has the tables.

How to Lower Your Premium Before You Apply

I would never tell you to do a longer term if it’s not affordable. But as long as it’s affordable, the longer the term the better, because it doesn’t get cheaper. So before you apply, the way to lower the premium is to shape the coverage rather than cut the term short: match it to your debts, keep it in one policy where you can, and compare insurers before anything is submitted.

You can cancel or reduce a policy at any time, but the insurance company can’t do that the other way. And debt falls while assets grow, so the risk is front loaded. The coverage should be too. That’s the whole idea behind layering.

I ran the same math for a homeowner recently, at a smaller size. Same idea, real quotes.

$4,105 less, about 17%. Figures as quoted to that client, rounded to the dollar; totals use the exact quotes. Age and health details left out.

Last step before anything is submitted: compare. Each insurer prices the same file differently, and a broker can run yours past all of them at once. Compare term life insurance quotes before you settle on a structure.

Nicotine, Health and Age: The Biggest Price Levers

The reality is that the biggest cost saving is simply that the smoker rate is so much more expensive than a non-smoker rate. After 12 months nicotine-free, most insurers will consider you for non-smoker rates, which sometimes can be one third the cost. Age is the next biggest lever, then health readings like weight and blood pressure.

Age works on a clock most people don’t know about. Most insurers round your age to the closest birthday within 6 months, so the price can step up half a year before your real birthday. Buying younger matters, and the steps get steeper:

Just past that point? Most insurers let you backdate the policy up to 6 months to keep the younger age, and a few allow longer, but you pay the premiums for the months in between. On a large policy it can save hundreds a year. When the saving is under $1 a month, it doesn’t really make sense to pay all that money for 6 months.

Health is the slowest lever, so start early if you want to move it. Regular activity can help the readings that set your class: how exercise can lower your insurance premiums.

How to Pay Less During the Application

If your health is excellent and the amount is large enough to qualify, the best way to get the absolute best rate is typically a full medical with a nurse visit and blood work, hoping to land a preferred rate. At smaller amounts, many insurers don’t offer preferred at all, and a healthy applicant often gets the fully underwritten price with no medical. The other savings come from picking the right underwriting route for your health and not paying for riders you don’t need.

In a best case scenario you’d be saving only a few dollars a month, and in a worst case you’d have a decline on your record. So for anyone with a health history, I don’t guess. Before submitting a formal application, I prepare an anonymous preliminary inquiry and approach 2 to 3 of the most appropriate insurers to get their initial underwriting feedback.

You can’t always add a rider later, but you can always remove it. Weigh each one on how life insurance riders work before you sign.

Can You Lower Your Life Insurance Premium After You Buy?

Yes. If nothing about you has changed, “payments will only go down if you reduce the amount of coverage,” and you can do that any time, down to the policy’s minimum, without anyone’s approval. Every other route needs a trigger first: you quit smoking, your health improves, or your term comes up for renewal. Each of those runs through an underwriter.

Cut the coverage, not the policy

When money gets tight, the reflex is to cancel. What I told a client in that spot this year: “Cancelling altogether may solve the short-term pressure, but restarting coverage later would likely be more expensive due to age and possibly health changes.” Cut the amount instead, and keep the age you were issued at.

Quit smoking after you buy

A year after I wrote to one client, “Please remember you would be considered a non-smoker if you quit for 1 year,” they wrote back to say they’d quit, and asked two things: would the payment go down, and could they get a little more coverage? Yes to both, if the insurer agrees. And insurers don’t all ask for the same thing.

Ask for a rating review

If your policy was rated for something that has since improved, ask for a review. When one client’s rating was reconsidered, my first question to the insurer was, “Do they back date to when policy started and give a refund retroactively?” They don’t. The lower premium ran from the change date, so once you qualify, every month you wait is a month at the old price.

Re-shop before you pay a renewal

Most term plans “can also be renewed at the end of the term without new medical evidence (at a higher rate).” No medical means the renewal price is set for everyone who keeps the policy, healthy or not. As I explained it to one couple, “they mitigate their risk by simply saying, we’ll renew it, but it’s going to be much higher than what the marketplace rate would be.”

I reach out to clients on a yearly basis, and if there’s a change in the industry or some new product comes up, I’ll flag it. That yearly review is how these four levers get used on time, instead of after a renewal notice lands.

Mortgage Insurance vs Life Insurance (and Where Group Coverage Fits)

In my experience, “mortgage insurance is actually more expensive than life insurance,” and it covers less. I worked at a bank for many years and saw it time and time again. Bank coverage pays the bank and shrinks as the mortgage goes down, while the premium generally stays the same. Individual policies pay your family, and the coverage stays level for the full term.

And “you can’t move lenders and keep that coverage.” Shop your mortgage at renewal and the bank insurance stays behind, while your own policy doesn’t care who holds the loan. Keep the bank coverage until the new policy is approved and in force, then compare personal mortgage coverage against what you pay now. The full mortgage insurance vs life insurance breakdown goes further.

Group coverage through work

Group life is great to have, but “coverage may be one or two times salary, but that might not account for the bigger picture. It doesn’t account for debt like mortgages.” It’s also tied to the job, so it usually ends or shrinks when you leave, often at an age when replacing it costs more.

Fill the gap with a personal policy while you’re younger, because it doesn’t get cheaper, and it stays with you whatever job comes next. More on how group life insurance works.

Life Insurance Discounts: The Few That Actually Exist

Not the kind most people expect. “Life insurance is unlike any other insurance like car and home, where there can be alumni discounts.” What it has instead are a few structural price breaks: paying once a year, how two people share coverage, and one program that prices your habits.

When clients ask whether paying yearly saves anything, I tell them “the savings is approx 8%.” It comes from how insurers price the monthly option, and it’s the closest thing life insurance has to a discount.

For couples, a joint policy looks cheaper because it only pays once. As I told one couple, “it may actually make more sense to do two individual policies than the one joint policy in this case.” For a little more premium you get two death benefits.

One program does tie price to habits: Manulife’s Vitality Plus, where savings on Family Term and universal life depend on the Vitality Status you earn. If it’s the perks that appeal, my answer hasn’t changed since a client asked about restaurant and store discounts: “I wouldn’t recommend paying more for any perks as there is always an underlying cost associated that you are paying for.”

Common Questions About Lowering Your Premium

A life insurance premium is what you pay, monthly or once a year, to keep a policy in force. It’s set the day you apply by your age, health, nicotine use, the amount and the term, and on a level term policy “the premiums are guaranteed for the full term.” That’s why most of the savings below happen before you sign.

Why the Same Policy Costs More at Some Insurers

Because, as I tell clients, “I work with nearly 20 insurers and they do not all assess the same way.” Even for a healthy 35-year-old with nothing to flag, the same policy comes back at a different price from almost every insurer I run it through.

“I deal with almost 20 different companies. Right? And I don’t work for any company. I’m a broker.” Going direct gets you one of those dots. A broker can compare your price at all of them at no cost to you, run an anonymous check with 2 or 3 insurers first if your health needs it, then apply to the one that fits.