A good life insurance policy can offer benefits that outweigh its costs, but the details can be complex. Health risks are perhaps the most significant factor influencing life insurance rates. Like all insurance types, life insurance is designed to manage risk. Insurers calculate these risks based on what is being insured.
For life insurance, this involves assessing the health risks that may affect an individual’s life expectancy. Although it’s not the most comfortable topic to confront, it’s essential for life insurance. Generally, the healthier and younger the applicant, the lower the cost of their life insurance tends to be.
However, life insurance rates also depend on the type of policy chosen and the amount of coverage provided.
**Average Cost of Life Insurance Plans**
The average cost of life insurance varies based on demographics and policy types, yet some consistent pricing trends exist. For instance, life insurance rates typically rise with the applicant’s age. Because of this, policies with fixed rates are often sought by younger applicants who want to secure lower rates. Term policies, in particular, can offer fixed rates at more affordable price points compared to other life insurance types.
For a ten-year term life insurance plan with a $1,000,000 payout, the average monthly cost for non-smokers is $58 at age 25, $65 at age 35, $135 at age 45, $316 at age 55, and $790 at age 65. This increase in rates by age illustrates why many individuals choose to obtain term policies while they are still young. For smokers, these averages can be significantly higher, often more than double the rates for non-smokers.
**Calculating Life Insurance Costs**
While insurance companies generally keep their proprietary rating systems private, many offer free online quotes. Life insurance calculators provide quick and easy cost estimates for potential policy rates. Although these estimates are based on incomplete data and may differ from finalized costs, they usually come close to actual rates, helping applicants gauge their expected costs.
If you’re wondering whether now is a good time to buy life insurance, consider that term life insurance is more affordable than ever for many individuals. According to the Insurance Information Institute (III), half of the American population expects term life insurance policies to cost at least three times more than they actually do. This gap in perception highlights the value of using free online estimates. While these estimates are not perfect, they are often fairly accurate.
**Types of Life Insurance**
Different life insurance policy types serve specific purposes. The most straightforward and traditional type of life insurance is term life. These policies are set for a predetermined period, known as the policy term. Once the term ends, the policies must be renewed or replaced if you wish to maintain life insurance coverage. When people refer to traditional or average life insurance, they are often talking about term plans.
In contrast, a permanent life insurance policy lasts for the duration of your life, as long as premiums are paid. Whole life insurance is one of the more common types of permanent life insurance. These policies typically have fixed rates and include an investment component with a cash value that the policyholder can access during their lifetime. Due in part to these investment features, permanent life insurance policies often cost more than term plans.
**Buying Life Insurance**
When shopping for life insurance, keep the following tips in mind:
1. Be intentional about your timing. The best time to purchase life insurance will depend on your unique circumstances, including your age and other factors that influence affordability.
2. Consider your financial situation. Life insurance can act as a risk management tool only when it fits within your budget (this is a great opportunity to use a coverage calculator).
3. Determine which type of life insurance may be best for you.
Hamilton Insurance specializes in term and whole life policies, allowing most applicants to apply without a medical exam, although some health questions are still required. You can typically complete the online life insurance application process from home.
If you’re considering term or whole life insurance, get a free quote through Hamilton Insurance today and find out what your life insurance costs could be.