Do You Need Cheap Life Insurance Protection?
If so, you’re probably on a budget like most of us and you’re looking to find the most affordable coverage to protect the ones you love.
So, where do you begin? For starters, you want to consider how long you need your insurance to last. If it’s for 30 years or less, then term life insurance is the type of coverage for you.
There’s two basic types of life insurance: Term and Permanent.
What’s the Cheapest Type of Life Insurance?
Term insurance is the cheapest by far, if you only need coverage lasting for a period of 30 years or less.
But, if you need life insurance guaranteed to last for your entire lifetime, no matter how old you live to, permanent life insurance can help, but costs a lot more, because it’s guaranteed to pay out a death claim as long as you pay your premiums on time.
How Does Term Life Insurance Work?
Now, how does term life work? It’s easy to understand. You select the "term" which is the duration for how long your policy will provide insurance coverage.
If you pass away during the "term" of your policy, the person or persons you select as beneficiary of your coverage will receive the death benefit pay out from your insurance policy.
If you are alive when your term insurance expires, there is no pay out and the coverage ends.
How Long Do You Need Your Life Insurance to Last?
Usually, term life plans offer coverage for terms of 10, 15, 20 or 30 years. The longer the "term", the higher your cost of coverage.
How Much Life Insurance Do You Need?
And you’ll want to decide how much life insurance you need. Many experts suggest buying 7-10 times your income, but that’s just an estimate. You want to take into consideration your income, monthly expenses, savings, debt and financial goals.
The way to get the most accurate estimate of how much life insurance you need is to use a needs calculator. That way, you won’t be paying for more life insurance than you actually need.
Why is Term Life Insurance the Cheapest?
There are a few reasons term life costs so much less than permanent life insurance.
What is the Cheapest Term Life Policy?
Life insurance rates are based in part on the length of your policy term and the amount of coverage. So, the shorter the term, the lower your cost. And, the lower the amount of coverage, the lower your annual premium.
The cheapest type of term life plan is level term life insurance which offers premiums that remain the same each year for the entire duration of your policy.
In addition, the amount of life insurance provided by a level term policy remains the same each year for the length of your policy term.
Example of Level Term Life Insurance
35 year-old male pays $350 per year for a $250,000 15 year term policy.
Using the example above, the owner of the policy pays $350 each year for 15 years. If the insured person dies within the 15-year period of time, the death benefit of $250,000 is paid out to the beneficiary of the life insurance policy.
If the insured is alive when the 15 years is up, there is no pay out and the coverage ends.
What Factors Affect the Cost of Life Insurance?
Life insurance companies classify the applicants for coverage based on several risk factors in order to develop the rate per $1,000 of coverage that will be charged for a life insurance policy.
In addition to the type, amount and duration of insurance, there are several personal risk factors the insurer considers to determine if you qualify for life insurance and how much to charge for your policy.
Risk Factors for Life Insurance:
Tips on Saving Money on Life Insurance
When it comes to finding the lowest priced life insurance there are several tips you may want to follow to help you lower the cost of your policy:
Life Insurance Quotes
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