Insurance
What affects the cost of life insurance?
19 Sep 2009
How much life insurance will cost you depends on a few factors like your health, your age and the type of benefit or policy you have been looking for. The fact is that if you opt for life insurance at an older age you will have to pay higher premiums. The younger and healthier you are, the lesser premium you have to pay.
Factors that affect the cost of life insurance
The 3 main factors that affect the cost of life insurance are as follows:
1. Age: Your age is a very important factor in deciding how much you will have to pay for life insurance. Older people have to pay higher premiums than younger individuals. Generally older people are said to be in the high risk zone as compared to younger individuals. So, if you wait for long and apply for life insurance at 40, you are likely to be asked for a higher premium than what you had to pay if you bought life insurance at 20. Term life insurance premiums increase with age.
2. Kind of coverage: The type of coverage you buy also affects the money you pay for a certain life insurance policy. Term life insurance happens to be the least expensive of all coverage. However, term life insurance rates increase with age. The longer the term, the higher the premiums. Permanent life insurance may be more expensive than term life insurance but it has a benefit of locking in a premium for good. It is more expensive because a portion of your money goes towards other financial investments that the company makes on your behalf. This in return allows your policy to accrue cash value within a certain period. An equity indexed universal life insurance policy also allows accumulation of cash value that grows as the stock index grows. It does not have the risks normally associated with the equities market.
3. The insurance company: The cost of a policy may vary from one company to another. When buying a policy, first seek security from an insurance company. If you are investing money, you will want that you can utilize the money when you need it. If the company cannot afford to pay you back when you are in need, there is no use buying from that company. So, choose an insurance company that has an A+ rating. Maybe these companies will charge a higher premium but will also guarantee security.
Factors that affect the cost of life insurance
The 3 main factors that affect the cost of life insurance are as follows:
1. Age: Your age is a very important factor in deciding how much you will have to pay for life insurance. Older people have to pay higher premiums than younger individuals. Generally older people are said to be in the high risk zone as compared to younger individuals. So, if you wait for long and apply for life insurance at 40, you are likely to be asked for a higher premium than what you had to pay if you bought life insurance at 20. Term life insurance premiums increase with age.
2. Kind of coverage: The type of coverage you buy also affects the money you pay for a certain life insurance policy. Term life insurance happens to be the least expensive of all coverage. However, term life insurance rates increase with age. The longer the term, the higher the premiums. Permanent life insurance may be more expensive than term life insurance but it has a benefit of locking in a premium for good. It is more expensive because a portion of your money goes towards other financial investments that the company makes on your behalf. This in return allows your policy to accrue cash value within a certain period. An equity indexed universal life insurance policy also allows accumulation of cash value that grows as the stock index grows. It does not have the risks normally associated with the equities market.
3. The insurance company: The cost of a policy may vary from one company to another. When buying a policy, first seek security from an insurance company. If you are investing money, you will want that you can utilize the money when you need it. If the company cannot afford to pay you back when you are in need, there is no use buying from that company. So, choose an insurance company that has an A+ rating. Maybe these companies will charge a higher premium but will also guarantee security.
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