|
Let's
take a quick look at the dreaded term
life insurance premium. The first
take-away is that, hey...it's not that
bad! Term life insurance has
become incredibly affordable especially
compared with other types of life
insurance such as whole or variable
life. In fact, prices have dropped
significantly over the past decade in an
increasingly competitive market.
Let's dig a little deeper into what
affects term life premiums.
The
term life insurance premium is just a
fancy insurance word for the amount of
money you pay to keep a term insurance
policy in effect. It's your part o
f the contract with the carrier.
As long as you pay your policy, the
coverage will remain in effect for your
desired term regardless of health.
It is guaranteed renewable in this sense
for a fixed period of time.
Depending on the
life carrier, you typically
have the option of paying premium in
different ways and there can be a
discount to paying for longer amount
such as a year versus monthly.
The rates given in the quote engine are
usually the monthly amount but a
discount can be applied for annual
payments when you go through the
application process. There are
various ways to pay your premium
depending on the carrier that range from
billings to credit card/auto deductible
options.
What factors affect the term life
insurance premium?
There
are three main factors that drive your
term life insurance premium amount.
Think of a triangle with age at time of
enrollment, term length, and amount of
coverage. You really can't control
the page part (apart from not
procrastinating) but keep in mind that
there is a considerable cost to waiting
to
purchase term life insurance.
You will end up paying more in total
dollars by waiting. The key then
is to find the right "blend" between
term length and amount of coverage.
You can play around with these variables
when you run your instant term life
insurance quote in our free engine.
Health condition at time of
enrollment
Your general health and pre-existing
conditions can affect both your ability
to qualify but also your pricing.
Factors such as smoking, being
overweight, etc can have a bearing on
your pricing as the premiums are usually
set up among
health class such as Preferred,
Standard, etc. There may be
options for you even with health issues
although they might be for lesser
amounts and different than the one
listed in the quoting engine.
For
those who are frustrated with the
incessant rate increases from their
health insurance carriers, you'll be
pleasantly surprised to find that term
life premiums are fixed during the
desired term length. This is why
it's so important to purchase life
insurance as young as possible.
That fixed rate will be higher with each
passing year of your life if you wait to
purchase term life insurance.
Different carriers have riders available
that affect your term life premium.
These "riders" are essentially specific
add-on benefits to your core life
insurance coverage that cost extra
premium. For example, you may be
able to stop paying premium and keep the
policy in effect if disabled. You
usually pay an extra amount for each
rider. This is really a question
of personal preference. Our
thought is to buy as much core term life
protection (combination of
length and
amount) as possible with your available
budget. An extra $10/monthly might
buy you $100K more in coverage and that
would be our recommendation. That
being said, do not buy more than you can
afford over the long haul or it defeats
the purpose to lapse coverage when in
financial hardship in the future due to
over-insuring your life insurance needs.
There's a middle ground there and that is
where we recommend purchasing.
|
Term life insurance
