Compare Term Life Insurance Rates
Term life insurance is a great way to protect your family in case something happens to you. A term life insurance policy can ensure that your family has the resources to maintain their lifestyle if you are not around to provide for them.
You want to be sure you’re getting the best coverage for your money, so here are some things you should know in order to compare term life insurance rates.
Be sure to use the FREE comparison tool above to start your search instantly!
How Term Life Insurance Works
Term life insurance is a contract between you and the insurance company. You are the insured, the person whose life is covered by the policy. You are probably also the owner, although it’s possible to own a life insurance policy on someone other than yourself.
(For tax purposes, sometimes spouses own the policies on each other.) The owner pays the premium on the policy.
The Face Amount
The contract says that, as long as you pay the premium as agreed and the policy is in force, the insurance company will pay money to your beneficiary, or the person you name, when you die. The amount of money your beneficiary will receive is stated in the policy as the face value.
Most term life insurance policies have a level face value, so the amount of the benefit is the same for the term of the policy. In a few cases, the face value may decline over time if, for example, the purpose of the policy is to protect a mortgage, the value of which declines as it is paid off.
The Term
A term life insurance policy covers you for a certain amount of time, which is called the term. The term may be one year, five years, ten years, twenty years or more. A one-year term policy is usually renewable, which means that at the end of the year, you can get another policy for another year.
The price will go up, but you usually won’t have to fill out a new application or answer any health questions. Term policies for longer than a year usually have the same premium each year. This is called a level term policy.
How to Get Term Life Insurance
In order to get a term life insurance policy, you will need to fill out an application. The application will ask you questions about you, your health, your family history, your occupation and so forth. It’s very important to fill out the application honestly and completely.
If you misrepresent any facts on the application, the insurance company can deny a claim later on.
Medical Information
The insurance company will usually ask to get your medical records from your doctor. They may also send a medical professional to your home to do what’s called a paramedical exam. This usually includes taking your height, weight, blood pressure, a blood sample and a urine sample.
The company uses this information to screen you for certain diseases that could affect your ability to get insurance.
What Factors Affect Your Premium
Once the insurance company gets your application, your medical history and the results of your paramedical exam, they will determine your premium. You may have already gotten a quote from the insurance company but the final determination will be made after all your information is in.
Many companies ask a number of health-related questions before providing a quote, however, making their quotes quite accurate. The process of reviewing your application and medical records and assessing a premium is called underwriting.
Age and Amount
Your premium can be affected by many factors. The first is your age. The older you are, the more expensive you are to insure, since the likelihood of you dying before the end of the term is higher. Your gender will also affect your premium.
Since women live longer than men, they are less expensive to insure at the same age. The amount of insurance you are buying will also affect your premium. Like a lot of products, the cost per unit of life insurance goes down the more you buy. So, a $500,000 policy is less expensive per $1,000 of coverage than a $100,000 policy.
Your Health
The factor that has the most influence on your premium is your health. If you smoke, expect your premium to be quite a bit higher than that of a non-smoker. Likewise, if you are obese, your premium will be higher than that of a person who maintains a healthier weight.
If you have any chronic diseases, such as diabetes, hypertension, cancer or heart disease, your premium will be higher.
The health of your family members can also affect your premium. If your parents died at young ages from diseases that are typically inherited, your premium may be adjusted to reflect your increased risk. Your occupation can also affect your premium.
If you have a risky job your premium may go up. The insurance company may even check your driving record, and increase your premium if you have a lot of moving violations, since this indicates that you engage in risky driving behavior and your chance of having a fatal accident is higher.
Why You Should Compare
Since all of these factors can affect your premium, it’s important to compare term life insurance rates between different companies. Different companies will assign different values to each of these factors, so it’s important to find the company that charges the least for the risk factors you have.
By providing your health and other information to more than one insurance company, you can get different quotes and decide which one is best. When you are comparing, make sure you are comparing apples to apples.
Make sure the basics are the same. Each policy you compare should have the same face value and term.
Riders
Some policies have additional optional coverage or features, called riders. For example, some policies will allow you to add coverage for your spouse and/or minor children for a relatively small fee. Others have a rider that waives the premium if you become disabled or hospitalized.
Make sure that all the policies you are comparing have the same riders, and make sure that those are the riders you want. Riders are optional, and almost always carry and extra charge.
According to Fox Business, two riders you may want to consider are the guaranteed insurability rider and the term conversion rider. The guaranteed insurability rider gives you the option to purchase additional insurance coverage in the future without providing what insurance companies call ‘evidence of insurability.’
This means that you can increase your coverage without having to fill out another application or provide any medical information.
The term conversion rider allows you to convert all or part of your term insurance coverage to a permanent policy, again without evidence of insurability.
If you buy term insurance to protect your income while your kids are young, you may find that, once your children are grown, you still want some coverage, but not as much. Since getting a new term policy gets more expensive as you age, and since you may have more disposable income now that you are empty-nesters, the solution may be a smaller, permanent policy.
These riders let you purchase more coverage, whether it’s a larger face amount or coverage that lasts your whole life, without having to go through the underwriting process. If your health declines to the point where you would be unable to qualify for a new policy, or a new policy would be prohibitively expensive, these riders may come in handy.
Most people only buy term insurance once in their lives, and it can provide invaluable protection for your family. Make sure you understand what you are buying and compare rates to get the best policy for your needs. Compare rates using the FREE tool below to get started!