One of the main attractions to term life insurance is that it’s typically more affordable for most people, especially when compared to permanent types of policies.
It’s important to understand how term life insurance rates work. How are your premium rates determined? What are the financing options? Most importantly, how can you find the value that’s right for you?
Determining term life insurance rates
Term life insurance rates are different for everyone as there are a number of things that can factor into the final cost.
Length of coverage and amount purchased
First and foremost to consider is the length and amount of coverage you wish to buy. Generally speaking, a 30-year term life policy will cost more than a 10-year term life insurance policy with all other things being equal. A policy containing $500,000 of coverage will likely cost a bit more than one valued at only $200,000.
Life insurance premiums can be structured in a few different ways, and each may have an effect on the overall rate. For example, decreasing term life insurance involves a death benefit that gradually decreases over time. Level premium policies include a fixed rate that stays the same throughout the life of the policy. Return of premium life insurance returns the premiums you paid if you outlive the duration of the policy.
All of these financing options can have an effect on the rate of the policy.
Beyond those basics, there are a few other things than affect the rate of a term life insurance policy.
As a general rule of thumb, term life insurance rates typically increase with age. The younger you are when you sign up, the less you’ll likely have to pay.
Because women have a longer life expectancy, they will often pay slightly less for a policy than men.
Your overall health plays a role in determining your term life insurance rates. Most policies will require you to answer a few questions about your health and family health history and will also require you to undergo a basic physical examination.
Dangerous hobbies or jobs such as skydiving, scuba diving or race car driving can cause your rates to go up, as you may be considered a riskier person to insure.
- Tobacco use
Tobacco use is one of the biggest influencers of life insurance rates. Smokers can expect to pay considerably more for coverage than non-smokers.
- Driving record
Some life insurance companies may take a look at your driving record to see what sort of risk you may possess behind the wheel.
A rider is an optional clause that can be tacked on to a life insurance policy for an additional cost. Riders can include benefits for things like long-term care, accelerated death payouts or spouse coverage.
Your term life insurance rates can be affected by any riders you wish to include.
Finding the optimal life insurance rates
One way to ensure you get the most competitive rates in your area is to work with an AIG-appointed life insurance agent who can help you find a policy that fits your needs.
Contact us today at 1-800-390-3019 to get started.
Agency services provided by AIG Direct Insurance Services, Inc. ("AIG Direct"), CA license # 0B57619 and AR license # 0100105378, a subsidiary of American General Life Insurance Company ("AGL"), Houston, TX and an affiliate of The United States Life Insurance Company in the City of New York ("US Life"), New York, NY, all members of American International Group ("AIG").
Policies issued by: American General Life Insurance Company (AGL), Policy Form Numbers ICC16-16901, 16901, ICC16- 16900 and 16900 except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life), Policy Form Numbers 16901N and 16900N. Issuing companies AGL and US Life are responsible for financial obligations of insurance products and are members of American International Group, Inc. (AIG). Products may not be available in all states and product features including rates may vary by state. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims paying ability of the issuing insurance company. ©2018. All rights reserved.