Term life insurance is among the most affordable of all life insurance available. The premiums for term life insurance is considerable lower compared to permanent life insurance. The cost of any policy depends upon many factors that include health, lifestyle and age. In addition, the lower premium for term life insurance is because the premiums are paid only for life insurance and no amount is invested to build cash value.
Classification and coverage in term life insurance
The life insurance companies determine in which category you belong after considering your age, health condition, medical history and whether you are a smoker or not. It then calculates the cost of premium according to the category, those having health problems and those who are smokers are taken to be in the “risk category”. These “high risk” people have to pay higher premiums compared to healthier people.
Your coverage amount for your policy is also responsible for evaluating the life insurance rates and when it comes to term policy, the length of the term is also a factor. Other important considerations include the age and health. An example given on the Personal Finance website of Kiplinger provides a good illustration of policy pricing:
For a 28 year old woman in good health, a $500,000 policy for 20 years will cost $260 every year that comes to $22 every month. Another example on the estimated rate that could be expected for a term life insurance policy is given by Investopedia.com. It states that a healthy person of 35 years and a non-smoker can normally obtain a 20 year premium policy with a face value of $250,000 for a premium between $20 and $30 every month.
Doing research work on term life insurance
A good way to begin your search on term life insurance is to do your own research thoroughly on the different rates available on the policies from the insurance companies. Make comparisons among the different rates of companies and finally arrive at your decision.