What Does Term Life Insurance Cost?

One of the first questions that most of the insurer seekers ask is – what does term life insurance cost? There are a lot of aspects that influence the cost of term life insurance. By far, this kind of life cover policy is the cheapest. Moreover, shorter the term you choose, cheaper is the policy. However, you can obtain best cost benefits only if you buy a life insurance policy at the right time and by evaluating the needs in your life.

On what does term life insurance cost depend?

Primarily, there are three aspects that decide the cost of your term life insurance – your age, your needs and your budget.

The younger, the better

The thumb rule is that buying life insurance early in life, when the chance of death is scant, is the best decision. Usually, people are diagnosed with chronic diseases after they cross forty or fifty years of age. So, when you buy early, the risk of preexisting illnesses is almost nonexistent. Secondly, when you are younger, you probably will not have outstanding loans, defaulted debts and bankruptcy filings. You credit score is healthier and so, cost of policy is lower. Thirdly, life insurance companies are more confident about selling cheap policies to people who are younger because they are considered low-risk customers.

However, the younger generation does not take life insurance very seriously. In most of the cases, two major milestones in life make people think about buying a policy – marriage and parenthood. Between these two options, studies have shown that majority of people buy insurance once they become parents. They postpone life cover even after their wedding, especially if both partners are earning members.

Term life policy is better for younger generation

According to experts, the younger generation can save money by choosing a term life policy over whole life cover. They say that since the chances of death are much lower for the younger generation, they can suffice with a term life insurance because it is cheaper and use the saved money for investing in retirement funds or other investment products. Although whole life policies are permanent and offer tax free cash value, these benefits are almost nullified because of the high costs of the policy. Premiums of whole life covers are almost ten times that of term life cover.

Unnecessary insurance is a waste of good money

When you are young, you really don’t need a whole life insurance because you might not need a policy after a fixed period in life. For example, if a youngster succeeds in life and manages to accumulate a lot of wealth, his family is well protected financially and doesn’t need a life insurance coverage. In such cases, continuing to pay the high premiums of whole life insurance does not make sense.

By purchasing a policy for a period of ten years, you have a choice to decide whether to continue with it or to close the policy. Although you can cancel a whole life policy anytime you want, you lose out on the cash value. In short, your life insurance policy should be subject to your needs if you want to save money on it. Term life gives you this freedom.

So, as you can see, the cost of a term life insurance policy depends on you. So, consider various factors and make the right choice.