The cost of life insurance
If you're like most Americans, term life insurance is probably less expensive than you think. A 2015 study, from Life Happens and LIMRA, found that 80 percent of participants overestimated the cost of term life insurance.4
Survey participants estimated that $250,000 in 20-year term life insurance for a healthy 30-year-old would cost $400 a year. In reality, the average cost is closer to $160.4 Overall, term life policies are typically less expensive than permanent alternatives. Term policies don't last for your entire life like permanent policies, nor do they accrue cash value.
Insurance companies use certain personal information to determine your rating class, which in turn will determine the premium you will pay. Your rating class can depend on a number of different factors, including your:
- Health status
- Tobacco usage
- Medical history
- Hobbies and lifestyle
- Family medical history
- Driving record
Applications for traditional, fully-underwritten life insurance policies will include some type of medical evaluation or exam for the insurance companies to check the factors listed above. The better your health, the more affordable your policy will be.
Younger people, women and non-smokers have lower life insurance rates on average. The older you are, the higher your premium will be to reflect the greater risk to the insurer. Buying a policy while you're still young and healthy is the best way to save money in the long run.
Tobacco use is also a big red flag for insurance companies reviewing your application. Smoking increases your risk for a long list of health conditions, which may cause an increase in your premium rate and negatively impact your ability to qualify for certain types of life insurance. You may want to quit smoking for other reasons, but saving money on your life insurance could be an added bonus.
Ready to discuss your life insurance needs? A licensed insurance agent is standing by to help you find a life insurance plan. Give us a call at 1-855-303-4640 today.