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Understanding the world of term life rates

What drives the cost of insurance

You can run an instant quote across the web and you generally get a page full of colorful plan names (with some twist on "assurance" or "protect" built in), carrier logo's, and a long line of term life rates.  It can be overwhelming especially on the rate side so it's good to go into the process of purchasing term life insurance with a little knowledge on what drives term life rates...and most importantly, how do you find the best rate for you. 

In general, when you run your instant quote through out term life insurance quote engine, the rates you get are the best on market for a given situation.  The key phase there is "given situation".  What's included in this bucket of facts is your age, gender, and health class.  All three of these details that drive term life rates are important and obvious since they all drive mortality risk.  Age is an obvious one.  Gender is a little less obvious until you consider that the average life span for men is shorter than it is for women.  The last one is trickier to estimate.  Health Class is a category of ratings that directly affect your term life rates.  It's pretty easy to correctly list the age and gender but you should probably check out our health class article to better understand where your rates fall. 

Back to the term life rates that appear in your instant quote.  The rates listed on down the page are monthly amounts you will pay to keep your policy in effect.  With insurance, you can usually pay quarterly or annually and there can even be a savings in doing so.  The other advantage is that the policy is less likely to cancel with a monthly billing that might be missed or paid late. 

You'll notice that's there probably not too much difference in cost across the spectrum.  Term life has become a commodity in today's world where the benefits and rates have narrowed in the market.  This is good news.  It means that you are likely to get a good rate and more importantly, unlikely to pay way too much for your coverage.  We take this a step further by allowing you to quote multiple carriers and plans side by side for a given term life amount and length of term.  It never makes sense to quote just one carrier the way some insurance agents do as there may be certain price points or plans that work specifically well for your age/gender. 

The biggest impact on your term life rates is age.  Your rates will be locked in based on the age that you apply for coverage.  This is where the term, "Cost of waiting" comes from.  If you purchase $500K for 10 years of term at age 35 versus age 40, you could pay significantly more in waiting the extra years.  Also, you are at risk during that first five years of paying $500K (in the form of lost benefit) if the unforeseen happens.  If you're going to get term life insurance at some point, there's absolutely no reason to wait.  It completely defeats the purpose of life insurance and you'll end up paying more anyway.  It's a lose-lose situation. 

Keep in mind that the underwriter will determine the final health class and rates.  The quote gives you a good base but be conservative in case something comes out of the paramedical exam or application process and the carrier offers higher term life rates than you originally anticipated.



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