Factors Affecting Life Insurance Pricing
Life insurance is essential financial assistance to your family as the policy will pay when your family needs it the most. If you are currently considering getting life insurance; however, you are worried it is too expensive, you are probably wrong. Various factors will affect the price of life insurance, but the younger and healthier you are, the more affordable it is.
Various factors determine how much you will pay for the coverage you need:
Life insurance pricing in relation to the death benefit amount
The death benefit is the tax-free amount your beneficiaries will receive if you die while the policy is valid. In insurance terms, the death benefit is also called the coverage amount. Your insurance premiums are affected by the coverage amount you require – the more you need, the higher your premiums.
Life insurance pricing example: On a term-10 policy for a healthy 35 years old female where everything is the same except for the coverage amount, the monthly premium will be as low as $11.25 for a $250,000 death benefit, whereas the premium goes up to $18 for $500,000 coverage. (Both quotes are from the same company, “Foresters Life”)
Type of life insurance policy
There are two types of life insurance policies, and pricing will depend on the type you decide is best for you.
Term life insurance
With term life insurance, you decide on a fixed term for which you want your life to be insured. These terms are usually set at 10, 20, or 30 years; however, you can pick a term that works for you the best. With Term life insurance, the policy is more affordable, and the shorter the policy term, the cheaper your premiums will be. The reason being that the insurer carries the risk over a shorter period, and the probability of your dying young is less.
Permanent life insurance
With permanent life insurance, you pay the insurance premiums your whole life. Your family gets the death benefit no matter how old you are when you die, considering the premiums are paid, and the policy is inforce. With permanent life insurance, policies are more expensive.
Life insurance pricing example: On a Whole life (life pay) policy for a healthy 35 years old female where everything is the same except for the coverage amount, the monthly premium will be as low as $138.22 for a $250,000 death benefit, whereas the premium goes up to $253.43 for $500,000 coverage. (Both quotes are from the same company, “Foresters Life”).
Life insurance pricing in relation to Age is important in life insurance.
Younger people have a lower risk of dying, so life insurance will cost less for them. The younger you are when you purchase life insurance, the lower your insurance rates are.
Life insurance pricing example: On a $250,000 term-10 policy for a healthy 35 years old female, the monthly premium will be as low as $11.25, whereas a healthy 45-year-old female will pay almost double that amount at $18 monthly for the same coverage. (Both quotes are from the same company, “Foresters Life”).
Gender is not equal when it comes to life insurance.
Men and women have different life expectancies, which changes how life insurance is priced for the two genders.
Data released by Statista for 2020 indicates that females are expected to live for 84 years, whereas males are expected to live up to age 80 in Canada. Therefore, life insurance rates for women typically cost less than for men.
Life insurance pricing example: On a $250,000 10-year term policy where all else is equal, a 35-year-old male would have a monthly premium of $14.40, and a female would have a premium of $11.25. (Both quotes are from the same company, “Foresters Life”).
Smoking increases premiums considerably.
Smokers have a higher risk of dying at a younger age, which increases their life insurance premiums considerably.
Life insurance pricing example: On a $250,000 10-year term policy where everything else is equal, a 35-year-old female smoker will pay $22.50 monthly compared to only $12.60 of his nonsmoking counterpart. (Both quotes are from the same company, “BMO Insurance”).
Health issues have implications.
Your health history will also play a role in your insurance premiums pricing, and insurers run a thorough and comprehensive health assessment on all applicants. If there are health questioners, the applicant/insured must be truthful to avoid the policy being void or cancelled. This is because various illnesses can affect your life expectancy.
In many cases, the insurance policy will cost much more as the policy will be considered “rated.” In some cases, the insurance company may reject the application due to the high risk of insurability.
Lifestyle affects your life insurance rate.
Your lifestyles, such as diet, exercise, hobbies and alcohol consumption, also play a significant role in determining your life insurance cost.
A healthy diet and a reasonable height and weight ratio will help you acquire life insurance at a lower cost.
Alcohol consumption and dangerous hobbies and activities can increase your life insurance cost or get you a rate or exclusion on your life insurance policy.
Making the right choice
Before deciding to approach an insurer for life insurance, decide on the amount and term, you want to be insured for. You can do so by consulting an insurance professional or use the online platform to get a rough idea of your financial liabilities and the amount at risk.
Your insurer will calculate your insurance cost by taking all the above factors into account. Some factors cannot change your insurance rates, but it is crucial to find an insurance provider that can factor in your family’s unique needs to your life insurance policy.
AplusWealth Inc. is here to help you find the right insurer at the best price.
An expert advisor is the best person to help you secure your family’s financial future and guide you to compare different life insurance pricing and find the best life insurance type. A financial advisor or insurance agent will assess your financial needs, look at the existing life insurance policies you may have. They will find a way to cover all your life insurance needs within your budget.
Life insurance and the covid-19 pandemic process are done entirely online. Thanks to our expert advisers who are entirely comfortable with the online life insurance & investment platform, you can take advantage of their expert opinion about if nothing has changed by taking your age, and health, liabilities, and goals into consideration. At Apluswealth, you can get a quote, compare the life insurance pricing, and find the life insurance quote you feel comfortable with. Our life insurance advisors will provide you with quotations and the most suitable policy types.
Contact our expert advisers today and find out which is the best life insurance for you.
Email: Contact@apluswealth.com
Tel: 1-888-461-6120