Whole Life Insurance Rates

If you are shopping for permanent life insurance, whole life insurance is the traditional type of permanent plan to be offered to consumers.

Unlike term life, which is only valid for a specified period of time, whole life insurance will stay in effect for the remainder of your life as long as you keep up your payments.

For individuals who want to avoid the panic that comes with a term meeting its expiration date, whole life has become a great alternative.

Permanent policies are dramatically different from level and decreasing term insurance because it has an insurance component and an investment component.

Instead of paying for pure life insurance, like you do with term, you are paying for pure life insurance, account management fees and investments.

Because you are paying for so much more than you do when you buy temporary insurance, you can expect your whole life insurance rates to be higher than the rates for the same amount of coverage in a term life insurance plan.

As a consumer, it is in your best interest to educate yourself on how whole life insurance works and how the rates are ultimately calculated.

Understanding these details before you begin to compare rates is crucial so that you can learn why the rates can be so different.

Here is your guide to information you should know about whole life insurance rates before you start to shop plans.

What Are the Benefits of Whole Life Insurance?

Before you can justify paying permanent life insurance rates to buy whole life coverage, you should set aside some time to learn the benefits of choosing whole life insurance over cheaper options life annual renewable term insurance or level term insurance.

Whole life, also called ordinary life by some insurers, is the most popular form of permanent insurance sold today because it makes something as complex as a cash value insurance plan easy to understand and easy to manage.

Level Payments For Life

As the simplest form of cash value insurance, whole life makes budgeting for your life insurance easy because your payments will never change once the policy is issued.

In exchange for the premiums that you pay, you will have peace of mind in knowing you will have the death benefit as well as the cash account that earns interest.

Your payments will not go up as you age and you never need to worry about increasing your payments and funding to keep the plan paid up like you do with a flexible Universal Life plan.

Living Benefits

Whole life policies are cash value plans. As a cash value plan, there is a cash account that you can withdraw money from, borrow from, or let sit there to accrue interest.

By choosing a policy with a cash value, you are making payments to a financial product that offers the named insured a living benefit in addition to the death benefit. If the living benefit is never accessed, it will simply increase the death benefit that is paid.

Always Have Life Insurance

Yet another benefit of whole life insurance is that you will always have coverage no matter what happens to you as you age.

Many people find that term insurance is a great short-term option, but once they find that they have a medical condition the idea of renewing their plan is no longer an option.

Being unable to pass medical checks for coverage in the future can entirely change your financial plans. By qualifying for whole life insurance while you are young, you will not need to stress about the prospect of living life uninsured with no financial protection in place for your family.

Riders Are Offered

There are several different riders that you can add to your whole life plan to make it the best financial tool ever. The disability rider will waive your premiums if you suffer a covered disability.

The spouse rider will provide a small amount of coverage for your spouse on your policy.

Guaranteed insurability is also a great option because you can increase your coverage at specific intervals without needing to medically qualify. Be sure to ask about riders when you are obtaining quotes to price their cost.

How Rates Are Affected by the Way Life Insurance Works

Wondering why permanent life insurance rates can be up to 10 times the cost of term insurance premiums is understandable.

Many people who are not very familiar with whole life cash value policies simply do not understand how the same death benefit in a different type of insurance could justify such a huge variance in price.

To understand why the rates differ, you must first understand how whole life works while you are funding it.

Level Rates For Your Entire Life

Whole life offers you protect for your whole life, and because of this the insurer must calculate how much pure life insurance rates you will need to pay so that they do not take a major loss by offering you level premiums.

The cost of insurance to protect you does fluctuate but the premiums stay the same because they project the expense in advance.

The insurer will then in turn invest the money to earn interest so that they can earn profits and still have the funds to pay claims as they are filed. The projected costs are a major reason why premiums are so much higher than term insurance.

Another reason is there is much more risk to insure someone for their whole life than there is to insure them for just 20 or 30 years.

How Premiums Are Used

When you receive a quote and apply for insurance, the application is underwritten and the policy is then issued at a rate based on your risk class. Once issued, whole life premiums stay the same.

The premiums that you pay go to the insurance general account where the expenses, cost of insurance, taxes and mortality charges are deducted. The remainder of the premiums paid will go to the company’s investment portfolio.

The cash account will be credited with a fixed amount and interest. This cash account will rise, and as this value rises, the death benefit will fall. This is how premiums can stay level when you have protection later on in life.

If you do decide to take a loan from the policy, you must pay back the value plus interest to prevent it from being deducted at the time of your death.

Other Factors That Can Affect Your Premiums

How the policy works affects the rates, but your personal factors can also affect your rates when you are applying for permanent insurance.

Consumers should remember that their health, family history, and other personal factors can affect their ability to get insurance no matter what type of insurance they are applying for.

The greater the risk you are, the greater your premiums will be. This is how the insurance marketplace as a whole works in the standard market.

Health and Pre-existing Conditions

Insurance companies use mortality and morbidity tables to calculate your life expectancy based on your age, gender, region and other factors. When you are healthy and free of any medical issues, your life expectancy is understandably going to be longer.

When you have been diagnosed with minor conditions or major diseases, the number of years that you have to live go down. This can affect the insurer because they will have less time to collect premiums and invest.

To balance the difference, the insurer will charge higher premiums and may actually decline your application.

Smoking and Drinking

Smoking and drinking can lower life expectancy. These habits, while they may not affect your health in the short-term, have terrible affects in the long-term.

If you smoke, you can expect to be classified as a tobacco user. The rates for these classes are higher.

Occupation, Travels and Hazardous Hobbies

Your lifestyle also plays a role in how much you will pay for whole life insurance. If you work on ceilings daily instead of working in an office, you have a risky occupation. This could lead to a premium surcharge.

If you travel to a dangerous country, you may be denied or tabled rated for coverage.

People who scuba dive, base jump, sky dive or do other extreme sports may also find that their premiums will be high.

Whole life insurance is perfect for anyone who wants permanent insurance with a savings component. If this type of policy interests you, it is time to compare whole life insurance rates so that you can price the cost of coverage with leading insurers.

To make finding the best rates easy, you can use an online rate comparison tool and get multiple quotes instantly. Enter your zip code, your gender, and your date of birth so that you can access the rates for coverage right away.

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