After our child was born, my spouse and I realized it was crucial to look into life insurance to ensure our family’s financial security. We knew it was essential to protect our dependents, so we started researching what affects the cost of life insurance. Here’s what we found that might help you plan:
1. **Deciding on the Coverage Amount**
Choosing the right amount of life insurance coverage can be tricky. You’ll need enough to cover funeral expenses, pay off debts like mortgages and car loans, cover your children’s college fees, and provide for at least a year of living costs so your family can cope without financial stress. Generally, a $500K policy is cheaper than a $1M policy, but remember, inflation can impact how far that money will go in the future.
2. **Length of the Policy**
Many people choose term life insurance, which can last 20, 25, or 30 years. With term life insurance, there’s no payout if you’re still alive at the end of the term. A 30-year term policy costs more than a 20-year one because there’s a higher chance of passing away during the last decade, increasing the likelihood that the insurance company will have to pay out. Hence, the costs are higher.
3. **Health Status**
Healthy individuals have an easier time getting life insurance. If you have a family history of serious illnesses like cancer, you can still get insurance, but it might cost more than for someone without such a history.
4. **Body Weight**
Many insurance companies charge higher premiums for those who weigh more. If you’re considering losing weight, it’s a good idea to do so before applying for life insurance. Check the company’s weight guidelines for your height to understand how it might affect your costs. For example, a man who is 6’1″ and weighs over 250 lbs may be considered a higher risk compared to someone who weighs 210 lbs.
5. **Age Considerations**
The best time for men to get life insurance is in their early 30s. In their 20s, men are viewed as higher risk due to their tendencies to take more risks. By the early 30s, many men have settled down and started families, making them a safer bet for insurance companies that aim for profitability. Older men are seen as higher risk due to the increased likelihood of developing life-threatening conditions. If you’re between 25-35, find out which age gets you the lowest premium. This can save you a lot over the policy’s term by locking in the best rate.
Have you come across other factors that affect life insurance costs? What tips do you have for finding affordable yet reliable life insurance policies?