Finding the Most Affordable Life Insurance Rate Takes More than Comparing Insurance Quotes
Everyone knows that when shopping for just about anything, it is wise to compare both products and prices to ensure you are getting the most for your money. This is the same for life insurance. Most sites and experts will give you the same advice: compare rates before you buy.
While it is true that in order to ensure affordable life insurance rates you must be prepared to compare term life insurance quotes, other factors also determine your rates. It is key to understand how your life insurance rate is calculated. Comparing quotes is a necessity; but here are four factors that will ultimately determine your rate: the product type, the policy’s face amount, your health class, and your age and sex.
1. Know your life insurance needs
There is a variety of life insurance products available today, many specializing in very specific needs. However, what most people actually need is a simple term life insurance policy. Unless your needs are specific, such as protecting an estate or investing, researching the other products would only be a time consuming and confusing chore.
Here are some reasons you may want to look into other insurance products:
- Your insurability is negatively impaired (e.g. health problems or risky activities)
- You want coverage for your entire lifetime
- You can't wait for a lengthy application process
One of the first steps when shopping for a term policy will be for you to determine how long you will need the coverage. The most affordable option would be to choose a short-term policy and buy a new one every time your coverage expires. This also introduces the added benefit of having to shop the insurance market frequently, ensuring you are always getting the best rates. Life insurance rates have been decreasing during the past years, and whereas rates are low now, they could get lower in the future. Reviewing your policy often, even if it does not expire, would be a wise decision for anyone concerned with having the most affordable coverage.
There is however, the risk that you could acquire impairment to your insurability over the years, such as an illness. If this does happen, when it is time for your current policy to expire and for you to purchase a new policy, you will have more expensive life insurance rates.
2. Know how much coverage you need
Like one would expect, a policy with a high death benefit is going to cost more than one a smaller benefit would. In order to ensure than you get the best rate, you should determine what your actual needs are, while making certain that you do not overestimate your needs. If you are like most Americans, however, this will not be an issue for you because most people will admit that they do not have enough coverage to protect their survivors.
A death benefit estimation for most families would be around 8–15 times greater of the purchaser’s annual earnings. When calculating your needs more precisely, the three principal considerations for most shoppers are:
- Your survivors’ cost of living (and how long they will depend of the benefit).
- Your current debts.
- Your current assets. (Deduct these from cost of living and current debts.)
3. Be aware of your health
Your insurability is calculated based on the health class you will be assigned to and each health class group is attached to a certain life insurance rate. While your health matters, it is the class that you fall into that matters the most.
The health classes are often: Best, Preferred, Plus, and Standard. When comparing quotes you will select your own health class, using your knowledge of your current health condition and the criteria outlined in the guidelines for each health class. When you apply for life insurance, the insurance company will reexamine your health class based on an investigation, which normally includes a medical examination and review of medical records and family history.
The best advice is to take good care of your body before your exam by eating right, sleeping, exercising, and staying away from risky behaviors.
4. Age and sex
The older will have higher insurance rates than the young will and insuring males is more expensive than females. These things are standard and there is nothing sensible that one can do to adjust these factors.
Article by WholesaleInsurance.net writer Angela Rosas.
To speak with a licensed life insurance advisor, call 1-800-823-4852.
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