If you’re trying to calculate life insurance premiums, there’s no better way than to obtain and compare life insurance quotes. Each life insurance company calculates rates slightly differently, so to know how much you’ll pay, you might want to get quotes from a few different carriers. However, life insurance quotes do not vary as much as home or auto quotes, so you should get fairly similar quotes for the same coverage types and levels across carriers.
Understanding the factors that affect life insurance rates might also help you get a lower price:
- Your policy type and limits: As you might guess, the amount of insurance you purchase plays a role in determining what you will pay for your policy. A policy with a death benefit of $3 million, for example, is likely to cost more than one that has a payout of only $500,000. The type of policy you purchase will also play a role. In general, term policies are more affordable than permanent types of insurance.
- Your age: While you can’t do anything about how old you are, even the best life insurance companies use your age to calculate your rate. Simply put, life insurance rates are based on the risk of a company paying your death benefit. The older you are, the more likely you are to pass away during the policy period, so the higher your rates will likely be.
- Your health: To some degree, you can control this rating factor. If you are generally healthy, you’ll probably get a cheaper life insurance premium. If you have chronic health issues, you may want to look for a policy that can be issued without a medical exam, although you should keep in mind that policies that don’t require medical exams may be more expensive to account for the risk.
- Your occupation: Having a career that puts your safety at risk could mean you’ll pay higher rates. These jobs might include law enforcement officers, firefighters and active military members.
- Your hobbies: Just like your job, having risky hobbies could mean you pay higher life insurance rates or that you’re denied coverage altogether. Many applications ask if you are a skydiver, for example, and your answer may preclude you from coverage with certain carriers.
- Your habits: Any habits, like smoking or drug use, that put you at a higher risk for health complications or death are likely to either increase premiums or possibly even exclude you from coverage.
