Term life insurance was designed to provide a insurance benefit for those who need to maximize their coverage without breaking the budget. Offered in set term lengths of normally 5, 10, 20 and 30 year intervals, term insurance has lower premium rates than permanent life insurance, as known as whole life. The cost for this type of insurance is kept low because the premium is only guaranteed to stay the same for the set term of the policy. After the term expires, the premium to keep the policy normally inflates drastically.
Understanding the factors that affect the cost of life insurance can help the customer maximize their benefit while minimizing their premiums. The first factor of insurance is the age of the person taking the policy out. Generally speaking, the younger a person is that purchases insurance, the cheaper the premium will be. After the age of 45 premiums begin to incrementally increase in more noticeable amounts.
Another factor affecting term life insurance is whether the insured is a smoker or a non-smoker. Smokers can be penalized as much as 50% more than a non-smoker. It is not worth lying to the insurance agent though, because many companies have started to do blood testing before they issue the policy. Furthermore, they do investigate most deaths to make sure that accurate information was given at the time of application. However, if a person is smoke-free for at least one year, many insurers will consider that person for a non-smoker rate. This is a great way to save money. Not only will a person save the expense of the tobacco, but they will also save money on their insurance.
Being in good health and of proper height/weight proportions will also affect a person's insurance rates. This is obvious because the healthier a person is, the less risk they have of a premature death. Being overweight can also penalize a policy with much higher premiums. Lowering one's BMI (body mass index) will lower term life insurance premiums and also will lower a person's risk of weight related illnesses.
Finally, while one might assume that a lower term would also bring a lower premium because the price is locked in for a shorter amount of time, it often is not true. Insurance companies sometimes will sometimes give lower premiums for shorter terms, many do not. Most term life insurance companies will actually give lower premiums for the longer terms such as 20. While a 20 year term limits the time of coverage, it also helps the insurance company by increasing the time that they can count on a person's insurance premiums.
With so many factors affecting the cost of insurance, it is very important that a person does some comparison shopping. One wouldn't make a potentially life altering purchase without first researching it and then comparing prices between companies. This can be done by using an online service that will allow a person to get quotes from several companies. It can also be done by calling several companies individually; however, that can be very time consuming. Insurance quotes can vary greatly from company to company, therefore be sure to obtain quotes from several companies. Regardless of the method one chooses, being knowledgeable about life insurance is one of the best tools to save money on a policy.
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