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How Much Does Life Insurance Cost?

Alexa Goyette

It’s a strange fact of life that one of the biggest expenses you’ll ever make is one that you’ll never benefit from, one that can only be redeemed and used after your death. It’s a morbid thought but it’s one that you need to face, especially if you have anyone that relies on you on a daily basis.

Though it’s more essential for some people than others to have a backup plan in place, everyone should consider a life insurance policy once they reach a certain age. Just as car insurance prices are determined, life insurance rates depend on a variety of circumstances.

Most of the factors that determine the price you’ll pay are due to your own choices, including the company, term length, and coverage amount you choose. However, some of the reasons your insurance premiums are the price they’re at are due to more personal circumstances; your health, age and gender have a bigger influence than you’d think they might.



Your Lifestyle Affects Your Rates

There are quite a few components that influence your life insurance premiums. The most significant circumstance is the health of the person being insured. Healthier individuals experience lower life insurance rates, as they are considered lower risk. If you participate in dangerous activities or lifestyles, you’re considered higher risk. For instance, if you’re a smoker, your life insurance rates will be higher than if you didn’t. Your height, weight, and body mass index (BMI) also influence the price of your annual premiums. If you’re overweight or drastically underweight, your premiums will be higher than individuals with an average BMI.

Another way your life insurance rates are determined is by your age. Young people experience lower life insurance rates, as people are less likely to experience life-threatening illnesses in their younger years. Most people usually don’t experience big hikes in their prices until they are in their forties. As they age, their insurance premiums increase at higher rates; for instance, someone’s insurance rates may only rise by $5 annually between the ages of 25 and 30, then by $60 between the ages of 35 and 40, then by $400 between the ages of 50 and 55, and so on.

According to the Centers for Disease Control and Prevention, women have a higher life expectancy than men. In 2015, life expectancy in males was at 76.5 years, while life expectancy for women was 81.2 years. As a result of this data, women pay less for life insurance than men of the same age and quality of health.


Term Life vs. Permanent Life

There are two distinct types of life insurance, each with their own pros and cons. Term life insurance is usually the cheapest type of coverage someone can purchase. You can purchase this type of insurance to cover different lengths of time. The most common durations are 10-year, 20-year, and 30-year term life policies. Naturally, the longer the term you purchase for, the more you’ll be paying for this coverage.

Permanent life insurance is the more expensive option, but it doesn’t expire. You may not reap the benefits of your term life coverage if you don’t pass away during the time you’ve purchased it for. However, with permanent life insurance, your dependents will receive assistance no matter how long ago you initially purchased the policy. With higher expenses comes more significant long-term payouts.

If you want to save money right now, you have the option to purchase term life insurance that can be converted into permanent life insurance later. This way, you’ll get the benefits of permanent life insurance without having to pay the high premiums right now; this is the best situation for someone on a tight budget.


Don’t Wait

The longer someone waits to purchase his or her life insurance policy, the more he or she will pay overall. If you buy your life insurance policy when you’re 40 years old, your annual premiums will be much cheaper than if you had waited until you were 60 to purchase the same premium. Buying a life insurance policy while you’re still at a low risk age could save you quite a bit.


Go Shopping

The best way to guarantee savings when you’re investing in a life insurance policy is to shop around for different quotes. Looking into multiple companies with similar coverage options can save you a lot of money. You don’t just walk into your nearest department store and buy the first shirt you see; you try it on for comfort, look at the price, and look at yourself in the mirror while wearing it. If you knew you could buy the same shirt of an equal or higher quality for 2/3 the price, of course you’d opt to save the money! Why not use the same methodology when shopping for insurance quotes?