How to Use An Insurance Premium Calculator
Posted by Lenny Robbins on Thu, Nov 10, 2011 @ 03:49 AM
Using an internet insurance premium calculator to figure out how much life insurance will cost is a decent starting point if you’re looking to buy a policy, but it’s only that—a starting point.
When shopping for life insurance, you need to be aware of several fundamental problems when using insurance premium calculators.
- They tend to give consumers the idea that life insurance is a commodity—just plug in a few numbers, get a quote, and that’s the price you’re stuck with. That’s not the way it really is. Some insurance carriers offer more competitive prices than others. And some carriers offer better rates for certain conditions, such as being a former smoker who has recently quit.
- Insurance premium calculators usually don’t ask enough questions to give you an accurate quote. Remember a quote is just an estimate. Your actual rate can be different and will be in the actual contract you sign.
- Unlike an independent insurance agent with years of experience in finding the best insurance for clients, a quote engine isn’t capable of searching out the best deal for you.
Consider All the Factors
When an insurance carrier rates you to determine your premium, they consider multiple factors, including:
- your age
- your current health, including recent lab results (which are particularly important to people with diabetes or other diseases that can be managed)
- your health history
- your family health history (parents and siblings)
- medications you take
- whether you smoke or not
- whether you have a dangerous job or participate in hazardous recreational activities.
If a life insurance premium calculator doesn’t ask all these questions, you may be in for a surprise when you’re asked these questions before your premium is finalized.
And if a carrier never asks some of these questions, don’t think you’ve gotten away with something. If you chose a policy that requires no medical exams and blood work, or that takes your word whether you smoke or not, you’re going to be paying the high rates that are charged to people with medical issues or who smoke—whether or not you have those problems. When you avoid rigorous screening, insurance companies assume the worst.
The Bottom Line
The biggest drawback to insurance premium calculators is that they can’t think. They can't give you the critical advice you need. The numbers you punch in aren’t necessarily going to produce the same results on another quote engine. And even if you scour the Internet to try out multiple quote engines, choosing the lowest premium you find still doesn’t guarantee that you’ve found the lowest premium possible.
Life insurance is one of the most important decisions you’ll ever make. And it’s full of complexities. There are a myriad of different types of term and permanent policies available, and there are many factors that go into determining how you are charged.
Experienced independent life insurance agents with access to multiple carriers can not only help you decide what type of policy you need, they can guide you to the carrier who will offer the best rate for that type of policy.
Photo credit: DaveBleasdale