Comparison shopping for life insurance is key because there are hundreds of companies out there. In 2013, there were 850 life insurance companies in the United States.
All life insurance products are created by calculating the relationships of mortality, interest, expense and the financial values resulting from each based on time. The assumptions made concerning these factors determines the premium at which a policy is sold.
For example, let’s say that there is a group of 100,000 women who are age 25 and their mortality rate is 1.16 per 1,000, expected deaths from the group for the year is 116. A $1,000 death benefit per decrease results in $116,000 in claims. Each woman contributes $1.16 to cover the death benefits ignoring the cost of operation.
If you are researching life insurance options, here are some ideas to help maximize your life insurance dollars and get the best policy for your money. These days, life insurance is less expensive than most believe, even favoring those with long-term illness.
- Shop around and compare the market
- If you have long term health conditions, guaranteed life may be less expensive in the long run. A qualified agent will help you look at costs with your health condition and if too expensive, recommend life insurance coverage without a medical exam.
- Term life is probably the best option especially when you stay healthy, eat right and don’t drink or smoke.
- If you are not on the right health path, get on one because most insurance companies will give you credit if you have not smoked or drank in at least a year or more.
- Excess weight or being underweight can increase rates
- Follow your doctor’s care. This is essential in the underwriting process if you are not doing what your health care provider suggests. It makes no sense to try to hide anything about your health in an attempt to get cheaper insurance.
- Start young and you generally qualify for cheaper insurance without health issues.
- If your net worth is increasing through other assets, you may not need as much life insurance because other financial incentives will improve income.
Want to learn more about life insurance? Read our article The Most Frequently Asked Life Insurance Questions.