Lowest Term Insurance Premiums

There are many different factors in determining the lowest term life premiums.

If you were to investigate the purchase of a basic term life policy you would need to determine two foremost factors that must always be considered; the first is the amount of coverage, and second is length of term coverage. With these two factors you can obtain a basic term life product to fit your needs.

First the amount of coverage is an important factor because the premium for a $10,000 policy is going to be completely different then the premium for a $100,000 policy. Usually the larger the amount of coverage the higher the premium.  Of, course there are exceptions to this general rule.   Some exceptions are that a policy that is a graded or rated will have a higher premium than a policy that has preferred or standard rating of the insured. 

Which means that a person with a $100,000 preferred rating policy will pay considerably less than a per with a $10,000 policy that is graded due to the insured being a higher risk due to illnesses or operations incurred or the amount of medications that have been prescribed.

The Length of term is another important factor because depending on the company a 10 year policy may be less expensive than a 30 year policy for the same amount of coverage. However a 15 year policy may be more expensive for a young person than a 30 year policy. Insurance companies take into consideration the age of the insured and their mortality rate when determining the premium charged to the insured. Some companies will not offer 10 year policies to young policy holders because they believe it is not cost effective. 

The mortality rate is basically the chance of death of an individual based on multiple factors such as age, health, income, etc. These rates are determined by actuaries. The used to determine these rates to age 100 but now they are rated to age 121 due to the longevity of people now. With the advance of health care and food processing people are living longer therefore the longevity rate is longer for insured’s in this country than it used to be 25 years ago. Thus this assists in determining the lowest premium for a term life policy.

There are other factors that must be considered before determining the lowest term life insurance premiums in the United States. You must determine whether the coverage is an accidental death policy or a hybrid policy or an all cause policy.

What this means is that if it is an accidental death policy the premiums are going to be very low. The reasoning behind this logic is that the policy will only pay the beneficiary if the insured only dies of an accident. Furthermore, the insured must die of an accident that is not excluded from the policy.  Therefore, if there are more exclusions to a term life policy then the premiums may likely be lower.  Thus if the policy is an accidental death policy and it contains several exclusions then it may have the lowest term life insurance premiums. 

A hybrid policy is a policy that has coverage that includes accidental death and all cause death. It is based on a percentage. Depending on the amount of coverage the split can be 25 percent for all cause and 75 percent accidental death. Thus if a person dies of an illness then the beneficiary would be paid 25 percent of the policy amount. However, if the insured died of an accident the beneficiary would receive 75 percent of the total coverage.  Hybrid policies are being utilized so that more people can get coverage and if they choose to get exams their premium cost will be lower than if they tried to obtain coverage without a medical exam.

An all cause policy is coverage that will pay no matter how a person dies. Any illness, any disease, and any accident means the beneficiary will receive the full amount of the policy. These policies can have premiums that are low depending on whether the insured has had a medical exam or no exam. An insured with a medical exam will have the lowest premium changed because the insurance company has checked the health of the insured prior to granting the person coverage.

There are other considerations that may affect the determination as to the lowest term life premiums. These considerations are called riders. Riders are additions that are added to a policy to help protect the insured. Some of these riders could be added to give additional coverage to the insured’s spouse and children. Additional riders may be for return of premium or waiver of premium or inflation guard or for disability. If these riders are added to a policy then the premium price will be higher than the basic coverage of just the insured.

In conclusion, there can be many different factors that determine the lowest term life insurance premium. It is imperative that a person looking for a low premium must take into consideration the amount of coverage, the length of coverage, their health, their age, their rating, whether they want a medical exam or no medical exam, and the type of term life policy they are searching to buy.