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Life Insurance Rates Explained
Your life insurance rate stems out of a shared shared risk of death of a large group of people. There are a number of variables that help insurance companies determine what your life insurance rates will be. Here are a few:
- Mortality: Using mortality tables, your life insurance company determines the average life expectancy of each group of people. Each company can weigh variables differently, which is why some companies charge different rates. It is also why you may be denied coverage at one company, but approved at another. These tables help determine the risks and costs (on average) of covering people in a certain group.
- Your age, health profile, gender, work, and information in the physical exam that may be required for you to get life insurance, are all things that are plugged into the tables and used to help determine your life insurance rates.
- Interest: Insurance companies know they will earn interest on your premiums, which they invest. This brings them some additional money and is one of the variables that insurance companies factor in when determining your life insurance rate.
- Expenses: Life insurance companies charge to cover expenses. The term for this is cost loading. Costs vary from one company to the next due to the varying efficiency and expense costs of each company.
Types of Life Insurance
In addition, the type of insurance you are looking for has an impact on your life insurance rates, as will the amount of benefits the insurance company will possible have to pay out. Here are a few insurance types, each has different benefits and fall at different rates.
- Renewable Term: You are insured for a period of time and the policy will renew after each one. Your premium goes up each term.
- Convertable Term: This starts out as a term, but also allows you to exchange the policy for a more permamnent plan.
- Level or Decreasing Term: A policy where the face amount stays the same for the entire period is a Level Term policy. Decreasing Term policy, on the other hand, have face amounts that decrease over time.
- Adjustable Premium: Often you will get a more conservative premium early on in the policy, but the insurance company can adjust the premium later. That said, it can never be more than the maximum premium amount stated in the policy.
- Permanent Insurance: These are designed to protect for an entire lifetime.
The Payout Of The Policy
This is another factor that has an impact on the cost of your insurance policy. Make sure you are getting an amount of coverage that fits the goals you have for your life insurance policy. Some people want it to make sure the mortgage on the family home will be paid for and others simply want to make sure their funeral expenses and other expenses that result from their death will be covered. The larger the benefits, the larger the life insurance rates.
Life insurance provides financial protection to your loved ones after you pass on. The first step is to determine what goals you have for your coverage. The cost of life insurance is something that will hep your family and loved ones have financial stability and peace of mind in a time of need and after. We have a team that can help you get the coverage you need at the afforable life insurance rates that fit into your budget. Contact us today for information on what we offer and to discuss your goals with us more. We are happy to answer any questions you have and get you started with the right policy for you.