Why Life Insurance Rates Vary
Posted by Lenny Robbins on Wed, Feb 22, 2012 @ 03:34 AM
Life Insurance rates can be confusing. When looking at different policies from different companies, you may wonder how life insurance policy pricing works and what you can do to get the best value.
How does Cost Vary with Different Term Policies?
The younger you are when you buy a Term Life Insurance policy, the lower the life insurance rates on that policy will be. Generally it is best to buy as long a term as you need if you can afford it. For example, if you buy a 20 year Term Life Insurance now, it will cost you less than buying a 10 year Term life insurance policy now and another 10 Year Term policy in 10 years. However, the most costly decision is having no life insurance to cover your family. So it is better to get a 10 year Term policy now than none at all.
How do Insurance Companies Set Policy Prices?
Life insurance rates are set by each individual insurance company based on age, amount of insurance, term of insurance and the rating of the individual being insured. These rates are filed with the insurance commissioner or department of insurance in each state. These rates are not able to be discounted in any way.
How do Insurance Companies Determine Ratings of Individuals?
When you apply for life insurance, the company sends your application information to their insurance underwriter. The underwriter follows company guidelines and determines which rating category you will be given based on your:
- Age, height and weight.
- Medical Exam information including blood pressure and blood tests.
- Medical history.
- Smoking or non-smoking.
- Dangerous job or risky hobbies.
Does It Make a Difference Which Company I Apply to?
Absolutely. Insurance companies have different underwriting guidelines, which mean that you may qualify for a better rating at some companies than others. How can you know which company will give you the best rating? An independent insurance agent knows the ins and outs of different underwriting policies and can look at your situation and help you choose the company which is most likely to give you the best life insurance rates.
The Bottom Line
If you want the best life insurance rates, you should contact an independent life insurance agent. Along with helping you choose which company to apply to, they can help make sure you choose the right type and amount of life insurance for your situation. Even better, an independent agent is someone you know you can turn to as your circumstances change. An independent life insurance agent is your agent for life.
