Term life Insurance Rates

Term life insurance is the most common type of life product purchased.

One of the main reasons why term life is the product of choice is because it is affordable and will protect the named insured for a period of time while they have expensive financial obligations that will eventually go away.

To be an informed citizen, you do not just need to know the advantages and disadvantages of choosing term life insurance, you also need to understand why there is variance in the market when you are comparing life insurance rates.

If you are on a mission to find the best rates for term life, the first step is research. Anyone who is marries, has dependents, owns a business, owns a home, has debt, or has a large estate has a need for life insurance.

Once you know what life events and scenarios make term life the suitable choice, you will then need to understand how rates for term insurance are established and what factors could affect your rates.

Read this informative consumer guide and get answers to the most common and most relevant questions you may have never thought of asking. Be sure to use the FREE comparison tool above!

When Do You Need to Assess Your Life Insurance Portfolio?

When you live life without insurance, you are at-risk of putting your family in a financial bind if you ever were to pass away. If you do not have a spouse or children, that does not automatically eliminate your need for coverage.

You should still assess your insurance portfolio and determine what life events may present a need for more insurance or a different type of insurance plan.

Term insurance is not for everyone or for all life events.

If the need for financial protection will never go away, you need a more permanent cash value plan like Universal Life or Whole Life.

If you will eventually outgrow your need for financial protection as you pay down your debt, your dependents leave the home, or you approach retirement, term insurance is a great choice. Here are some of the instances when your life circumstances change and so should your term life portfolio:

You Are Getting Married

Planning a wedding is stressful enough, but during this planning process you must set aside time to do some financial planning with your spouse-to-be.

Many people do not even consider buying insurance when they are single, but when they think of their spouse trying to survive without their income they run right to an insurance agency for a quote. You will need to consider your combined debts, your income, living expenses and financial goals to choose the right limit of coverage that you can afford.

You Recent Bought a Home

Your home is perhaps the largest investment you will hold. If you or your spouse were to pass away, could you afford to pay the mortgage? Losing a spouse should not mean that you must lose your home.

It may feel like you are obligated to pay a mortgage for the remainder of your life, but as long as you are consistent you will pay off the property in 20 to 30 years. This is why term insurance is best when you are looking for mortgage protection.

You Are a New Parent

Children are expensive, and having a child creates new life insurance needs. When you have a baby, you want to do anything and everything in your power to protect them.

Protect them from financial instability and purchase insurance so your family does not have to do everything on their own in the dreaded event that you get sick or get into a deadly accident. The life insurance needs can be used for childcare, current expenses, and also for educational expenses in the future.

You Start a Business

If you own a business where you are a partner or the sole proprietor, you need coverage. In partnerships, buying term life is often a contract requirement so that one party is able to buy the other party out when they pass away.

Having coverage can help find a new employee or partner so that the business can thrive without going bankrupt. When you compare the types of policies you can choose from, term is the best because it offers low-cost premiums and a level death benefit for a specified term that you can choose.

How are term insurance rates established?

Comparing term life insurance rates is a must. The reason why comparison shopping is so important is because every company has their own unique set of rates that cater to a specific type of audience.

It is not realistic for any of the top writers of life insurance to target every single demographic when they are selling term insurance products.

This is because of how term insurance works and how premiums are used.

Term insurance is much more simplistic than permanent insurance. When you buy a term insurance plan, you pay a level premium that is based on your age, health, benefit amount and other rating factors.

The money that you pay will go towards both pure life insurance for the amount of coverage that you selected. Out of that premium, the company will take company expenses and the cost of pure insurance to put in the insurers reserves.

The rest of the premiums will be used to invest in stocks, high-yield bonds and other low-risk investment vehicles that are diversified so that the company can pay out claims while still increasing their profit potential.

To ensure that the company is priced to attract the type of market that they specialize in, they will create rates that are competitive for the market they are targeting. The rest of the rates must be priced fairly, but they may not be low enough to compete with another writer who wants to target that niche.

For example, company A wants to sell level $250,000 term insurance to new parents between 25 and 35. This company will be priced right in that age group but may not offer great rates to retirees who need smaller $100,000 term plans.

Now you can see why rate shopping is so important for consumers who are budget-conscious.

What factors can affect your rates for term life insurance?

One of the biggest factors that affects life insurance rates, for term insurance especially, is life expectancy. When your life expectancy is lower than someone else’s, you are considered a higher risk.

The higher the risk you are, the higher the term insurance premiums that you will pay, especially if you choose a longer term that extends past your life expectancy based on what the statistics say.

There are several different factors that will affect mortality and morbidity while shortening your life expectancy according to trends and data.

These are the factors that are used to either increase or decrease your premiums from the standard rate set.

Here are the most popular factors that may cause your term life premiums to go up or even go down:

Age and Gender

Your age at the time of the application is considered for rating purposes. This is because it shows how close you are to your life expectancy. Gender is important because females live about 5 years longer than males so they pay lower term rates.

Height and Weight

Being overweight leads to heart problems and other medical issues. This is why height and weight is used to calculate your Body Mass Index. If you are overweight or underweight you may not get the best rating classification.

Alcohol and Tobacco Consumption

Consuming alcohol and tobacco is not good for your health. If you have 2 drinks per day or you smoke, you reduce your life expectancy dramatically because you are prone to cancer or kidney failure.

Driving Record

If you drive recklessly, then you put you and your family at-risk. If you have major convictions or even minor speeding violations, your rates may be higher than someone with a clean record.

Blood Pressure

High blood pressure could indicate heart problems and a shorter life span which is concerning to life insurance writers. This is why you must take a paramedical exam to have vitals checked.

What are life insurance rating classifications?

To make quoting life insurance much easier for consumers, there is a basic set of rating classifications.

There are prices in each of these classes based on you age and gender.

You may fall into Preferred, Standard, Smoking or Smoking Plus which all have different price ranges.

With this guide, you will be able to navigate through the quoting process with confidence.

If you would like compare rates from the best carriers in the industry on a single platform, use the FREE rate comparison tool that gives you access to many term insurance rates and price policy costs for different benefit amounts from different top providers.