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How is the cost of life insurance determined?

The cost of life insurance is determined during the underwriting process, which uses several factors to figure your monthly premium. Term life insurance tends to be the more affordable option, as you’re only paying for life insurance for as long as you need it. On the flip side, permanent life insurance policies tend to be more expensive, but provide coverage for as long as you live. We can help you determine what kind of coverage is best suited for you and provide quotes from some of the most trusted insurance companies in just minutes. And, you never pay anything extra for our service.

Average Life Insurance Costs

It’s natural to assume the average cost of life insurance is expensive, but the fact is, you may be able to get substantial coverage at an extremely affordable rate—probably more affordable than you think. Term life insurance tends to be more affordable across the board, and generally speaking, individuals who are younger and in better health will have lower rate options. There’s truly never a better time than now to consider buying life insurance. The amount of coverage you’re seeking could also factor into cost, so if you’re not sure how much insurance you need, an easy way to get started is with our free life insurance calculator.

Four Factors That Determine Life Insurance Costs

There are a number of factors that can play into the cost of your life insurance premium. Having an idea of what these are can be helpful prior to starting the shopping process. Learn more about the main components that impact the cost of life insurance below.

1. Type of Life Insurance Policy

The type of life insurance you have will directly affect the cost of the policy.

Term life insurance policies are the most common and most affordable. One of the benefits of term life insurance is that you can choose the length of the coverage, typically 10, 15, 20, 25 or 30 years.

Permanent life insurance policies are more expensive, but could have varying perks for some people. The two most common types of permanent life insurance are whole life insurance and universal life insurance.

2. Amount of Life Insurance Coverage

The longer your term or the greater your life insurance coverage, the more expensive your premium is likely to be because higher the coverage amount or the longer you have the policy, the greater the chances your insurance company will have to pay out the benefit. To help keep premiums low, we can make sure you’re not purchasing more coverage than you need. And if you’re unsure about how much is right for you, our life insurance calculator can get you started.

3. Your Age & Gender

Your rate is set when you sign your policy, and it shouldn’t change during the duration, but the cost of purchasing life insurance increases as you age. Each year you delay buying a life insurance policy, the cost of premiums can increase, on average, by 8-10%. Additionally, part of the underwriting process includes evaluating how long you might live and using this to help determine costs. And because women tend to live longer than men,** they often receive lower life insurance rates.

4. Your Health & Lifestyle

For traditional life insurance—both term and permanent—you’ll have to complete a basic medical exam as part of the application process. It’s a quick, and simple process that usually takes less than an hour, but is crucial to help determine the cost of your premium. Some factors that might result in higher premiums include high blood pressure, high cholesterol, HIV/AIDS and hepatitis, hypoglycemia, chronic illness, nicotine use or recreational drug use. Additionally, if you participate in extreme sports or high-risk hobbies, you’re considered a bigger risk to the insurance company and might see a higher premium for both term and permanent policies.

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