term life insurance is generally the cheapest type of life insurance policy. Nevertheless, rates can vary substantially from one customer to another, and understanding the reasons behind these rate fluctuations can help you save money on your insurance premiums. In general, life insurance policies are cheapest among policyholders who are unlikely to use their coverage. In other words, people who are likely to live a long time pay less for life insurance.
There are several ways that an insurance company guesses how long a customer might live. The first and largest factor at play is the insured’s health. Individuals who have no existing medical conditions and lead healthy lifestyles will pay the least for insurance. Additionally, young people pay less for insurance than the elderly, but affordable policies are available for healthy senior citizens.
An insurance company sets its rates by assessing an individual’s risk factors and then assigning that customer to a specific risk category. The categories vary from one company to the next, and some companies weight particular risks higher than others. This is why many insurance companies require their applicants to submit to medical examinations; the insurance company wants to assess the applicant’s health as part of a risk assessment.
In addition to a person’s overall health, an insurance company will assess the customer’s habits and lifestyle. People who exercise frequently and eat healthy meals will pay lower premiums than those who don’t. Smokers will pay more for insurance than non-smokers, and individuals with dangerous hobbies or careers will pay more for insurance than those with safer habits. It’s generally a good idea to curb as many unhealthy habits as possible before applying for life insurance; this will ensure that you get the best deal possible.
Of course, not all factors that influence a person’s insurance are within that individual’s control. People with a family history of premature death, especially from cancer or heart disease, will pay more for insurance even if they themselves are healthy. Additionally, insurance companies take a person’s gender, marital status and other similar demographics into account when establishing a policy.
Additionally, the price for a policy will vary depending on the policy itself. Policies with longer terms will be costlier than those with short terms, and large policies will cost more than smaller ones. This means that you can adjust your premiums by varying the type of policy you buy. Doing so will allow you to get a policy that will meet your budget regardless of your health factors.
Many insurance companies offer affordable policies to individuals who may not be ideal candidates. By working to reduce your own risk factors and shopping for a company that will rate you fairly, you can get the coverage you need at a price you can afford. Comparison shopping among multiple insurers will always give you the best deal on term life insurance.