How Much Does Life Insurance Cost?
What a question, “How much does life insurance cost?”
I am asked this question on a daily basis. There are many variables that make up the cost (or premium) of a life insurance policy. They include the amount of coverage you are seeking, the length of time you want the coverage to last, your overall health, family history and age and whether you are a tobacco user. There are some variables that are just as important but most people are not aware of them which includes your occupation, if you are involved in any dangerous activities such as a private pilot or hang gliding or mountain climbing… this list can be rather long. Your financial net worth and annual income is also taken into consideration when the insurance company is deciding on what premium to offer you.
The most important component of the premium, however, is the purpose for purchasing the policy in the first place. Are you looking for maximum coverage in the event of premature death (I have always wondered how many deaths were right on schedule) to take care of your family or are you looking for cash accumulation in addition to the death benefit to give you a tax-free retirement income? Are guarantees important to you? Are you funding an Irrevocable Life Insurance Trust, or do you just want your mortgage paid off?
In addition, have you looked at the financial strength of the life insurance company? If you purchased a policy through an internet term quoting machine or didn’t consider all of the above factors, you may not have the right policy. Or you might be able to improve on the policy you already own. Let me tell you a dirty little secret about most online life insurance quoting websites. These sites want you to think that they can answer the question of “what is the average price of life insurance?” In reality, what some of them are doing is selling your information to any insurance agent, and I mean any agent, that will buy your information. These insurance agents may be less experienced or unaware of all of the factors involved in determining the best life insurance policy for you.
One last thing to be aware of- insurance companies will have as many as eight different rate classes and an additional ten substandard rate classes. I find that most people that were quoted a life insurance premium without all of the facts were misquoted by as much as three to five rate classes. It is very important that all of your personal factors are taken into consideration when preparing a life insurance quote. That is why a quote or a review using The LIFE Study is the preferred method in helping you to find the best life insurance policy for you and your family.