What Kinds of Factors Can Increase the Cost of Your Life Insurance Policy?
Posted by: Insurance Place by: October 11, 2016
Need a life insurance policy but think it’s too expensive? You aren’t alone—80 percent of consumers misjudge the price of life insurance, making it out to be more than it really is (Source: LIMRA 2015 Insurance Barometer Study). Millennials overestimate the cost of life insurance by as much as 213 percent, while Gen Xers overestimate the cost by 119 percent.
So just how much does a life insurance policy really cost?
That depends. Certain factors can increase the cost of your life insurance policy, such as the type of policy, as well as your health and age. Although these factors can increase the cost, it isn’t as bad as you think.
We’ll go over these factors to help you make the most informed decision when buying a life insurance policy.
Factor 1: Different types of life insurance.
Like other kinds of insurance, a life insurance policy can vary according to your needs. Most agencies will offer several kinds of policies that accommodate how much you want to pay and how often.
Term life insurance covers a certain period of time, such as one year to 30. If the insured passes away during this time, term life insurance will pay out. Payment can be monthly or yearly.
Whole life insurance costs a fixed, stated amount that is paid out upon death. You usually pay a fixed rate for the duration of the policy.
Universal life insurance is a more permanent kind of life insurance. Additionally, payments made in excess of the premium are added to the cash value, making it a good investment over a long period of time.
You can find other kinds of life insurance policies, but these are the most common ones you’ll have to choose from.
Factor 2: Your age and health.
Your age and health can affect the price of your life insurance policy. When you’re younger, you can probably find policies in the hundred dollar range that offer thousands of dollars in coverage. Your health matters as well. The higher risk you are, the higher you’ll have to pay. What does higher risk mean? Well, if you smoke or regularly engage in “dangerous” activities like mountain climbing, your premium will be higher.
Protect Your Family’s Future with an Affordable Life Insurance Policy
Maybe you didn’t realize how affordable a life insurance policy can be. However, its importance can’t be overstated. Whatever you end up paying for your policy, the benefits far outweigh the cost. Prices may vary according to coverage, but they don’t have to cost as much as you think.
Ultimately, the price of your policy will depend on when you signed up for it. The older you get, the more expensive most life insurance policies can be. It’s better to start earlier, so get the one today that will secure your family’s future.