Explaining How Term Life Insurance Premiums Are Set

Posted by ankita on March 2nd, 2017

Life insurers base term life insurance rates on the age, general health and whether or not the named insured smokes tobacco. The named insured is the person whose life is covered by the insurance plan.

There are no medical exams required when applying for the term coverage. Instead, the personal information of the named insured is compared to mortality tables that make it possible for life insurers to calculate the odds of someone dying while the insurance plan is in effect and come up with a term life premium. While it is somewhat easy for insurers to come up with rates, they do adjust term life prices by age. The younger someone is, the easier it will be to get inexpensive term coverage.

A healthy man or woman in his or her 20s or 30s who does not smoke or engage in risky activities, such as diving, the lower the cost for the term coverage. But the older the named insured is, the higher the rate will be for the life policy. Although term life plans can be very affordable for younger people, if the named insured also smokes tobacco, the term life insurance rates also will be much higher.

People who smoke cigarettes and other tobacco products generally are charged about double the amount non-smokers must pay for the same length of term coverage with the same death benefit. Non-smokers can get a 30-year term insurance plan with a 0,000 death benefit for about per month from many life insurers. Those who smoke tobacco would be charged about per month for the same death benefit on the same life plan.

But the rate for even those who are smokers is much lower than would be paid for a whole life plan with the same death benefit. For non-smokers in good health and with no family history of cancer, heart disease or other potentially deadly illnesses, the monthly premium might be as high as 0 or more for a whole life insurance plan with a 0,000 death benefit. That makes a term policy a more affordable option for many people.

About the only time term policies can be somewhat costly is if the named insured is in retirement years and wants a large death benefit or if the policyholder chooses an annual renewable plan. Each year an annual renewable term policy is renewed, the premium will rise. Term Insurance Premium Calculator help to calculate your premium. Carrying such a policy for 10 years or more could result in premiums that will be much higher than if simply buying a 10-year term plan or even a whole life insurance plan over the long run.

Good deals on term life insurance rates can be found online.

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