Term life insurance policies are actually pretty affordable for most people when you consider the level of financial protection it offers. Obviously, your monthly premium (and what you consider “affordable”) will depend on your individual circumstances and your budget. The term life insurance industry is very competitive – with a lot of different life insurance companies competing for consumers – which makes pricing pretty efficient and compresses margins.
When people are skeptical about overpriced life insurance policies and high margins and commissions, they’re usually thinking of whole life insurance policies. Unlike term life insurance policies, which have a set end date, whole life insurance lasts for as long as you pay the premiums. Instead of just being a straight insurance policy, there’s also a cash component that is basically a savings vehicle and can gain (or lose) value. This sounds great, but all of the involved fees can cause whole life policies to cost up to four times as much as a comparable term life insurance policy.
Generally speaking, you can usually get a better return by investing the difference on your own than relying on the cash value component of the whole life insurance policy. But, as always, there are cases where whole life insurance is an appropriate financial instrument (which is usually the case for people with more complicated estate planning needs).
To give you some background, here’s a general overview on how pricing for term life insurance policies works, and how you can lower your own rates if you feel a policy is overpriced for your budget:
- The life insurance carrier wants to see how risky you are to insure – what the likelihood is that you’ll die during the term of your policy. If you lower that risk, you can lower your rates. For most policies, the carrier will have you take a quick medical exam, so being in good health (low cholesterol, low blood pressure, etc.) will help lower your costs; they’ll also check your motor vehicle record, so the fewer violations you have, the better.
- Using an Financial Advisor like moneymindz. We at moneymindz.com will make it easy for you. Just give us a missed call on 022-62116588 or Visit MoneyMindz.com to explore our best_Free_Advisory_Service. We don’t sell of any financial_products. We only provide FREE financial advice so that you are not mis-guided while buying any kind of financial products.
I’m well aware of the the stigma against life insurance and its agents, and it’s one of the ways we’re trying to change the conversation at
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