Here are some of the factors that affect the price of your term life insurance.
Having the right life insurance is an essential component of a solid personal finance plan. However, with all the different policy options out there, it can be difficult to find the right coverage to meet your needs. Understanding some of the mysteries behind life insurance is one way to help you narrow down your options and choose the right policy for you. To help, here’s an explanation of the factors that insurance companies consider when determining life insurance rates.
Insurance Policy Size
Term life insurance policies come in a variety of sizes. Naturally, the bigger the policy you have, the more you will pay every month. However, you should not settle for a smaller policy just to save money on your insurance. The purpose of life insurance is to provide financial stability for your loved ones after losing your income. So, it’s important to make sure that you have enough coverage to address your various financial obligations.
Your Age and Health
One of the biggest factors that affects your insurance rate is your age and health status. Life insurance providers use this information to determine your overall risk and the likelihood of your death during your policy term. Generally, the younger and healthier you are, the lower your insurance rates will be. While most individuals wait to get life insurance until later in life, getting a policy earlier can save you a significant amount of money.
Your lifestyle also plays a huge role in determining your life insurance costs. If you engage in “high-risk activities,” you should expect to have higher life insurance rates. Activities such as white-water rafting, rock climbing, skydiving, and so on are listed in the life insurance questionnaire to determine if the applicant lives a low-risk or high-risk lifestyle. When answering questions about your lifestyle, make sure you are truthful; lying will constitute insurance fraud, which could prevent you from getting coverage altogether.
These are some of the major factors that life insurance companies will consider when determining your term life insurance rates. Do you have further questions regarding your life insurance? Then don’t hesitate to turn to the experts at John Scott Insurance. We are ready to assist you with all your insurance needs. Contact us to get started today.