Term Life Insurance Q&A
- Why should I choose BeyondQuotes?
- Which companies do we represent?
- Is BeyondQuotes licensed where I live?
- Is my information confidential?
- Do you only offer rate quotes?
- How do we choose which companies to represent?
- How much Term Life Insurance do I need?
- What are "level" policies?
- What should be the term length?
- Is it worth insuring my spouse on my policy?
- Can you explain the difference between Term and Whole Life plans?
- I suffer form a pre-existing condition. Can I still be insured?
Applying for a Policy
- How do I apply for Term Life Insurance?
- How do I find the best value plan for my needs?
- What is the waiting period between applying and coverage?
Life Insurance Premiums
How Life Insurance Premiums Work?
The life insurance industry is highly competitive and insurance companies are looking for any advantage they can to improve profits. Life insurance premiums are on the rise and the insurance companies are getting more and more sophisticated at determining your life insurance premiums.
When you apply for a life insurance policy you are embarking on a highly personal and lengthy journey. The core of the life insurance industry is the underwriting process. Underwriters take all your personal data to determine the risk of you dying before the policy expires.
Underwriters take mathematical equations determined by actuaries. Actuaries study the risks of everything that might pertain to your death. They take statistics from every aspect of life. They take statistics from car accidents, number of deaths reported for every disease imaginable, and geographical considerations. These are just a few of the factors that actuaries use to formulate their risk tables.
These risk tables are the heart and soul of the underwriting policy. The talent for the underwriter is in taking all this data from the actuaries to determine whether you are a good risk for life insurance, so they can either accept or deny your application and, if you are accepted, what you are going to pay for your premium.
Underwriters are not evil; they are just doing their job to help the insurance company make as much profit as possible. The worst thing for the bottom line is to have to pay off on a policy. Having your customers die makes the insurance companies less profitable.
The price you pay for life insurance is determined by how likely it is for you to die.
When you apply for life insurance there are many steps you must go through to complete the application process. You must answer over a hundred questions about your health status and lifestyle. You must list every disease you have ever had. If you have had a disease you must detail all the circumstances of your illness. If you are over 50 be prepared to write a lot. They want to know every health problem you have ever had since you born.
Next, they want to know about your family's health history.
They want to know about your parents, your grandparents, and your ancestors to determine whether you are prone to any of the diseases that are in your family tree. It is a fact that many diseases do pass from generation to generation. Therefore, they must be taken in to consideration when determining the odds of you dying while your policy is in effect. Any history of heart disease, cancer, or diabetes means the more you have to pay or even if you can purchase insurance.
If you want the best insurance premium rate possible, most insurance companies make you go to your doctor, or one of their own doctors for a complete physical, including blood tests. They want to find out if there are any possible conditions that you don't even know about. You must sign a document to allow the insurance to inspect your health records. If there is any sign that you are not completely healthy you may be sent for more extensive testing. Even with the additional tests, you are already in a higher risk category and will pay a higher premium.
After determining your health risk, the company will then want to know all about your lifestyle. They will want to know if you smoke or if you have ever used illegal drugs. Obviously these are high risk behaviors. They will consider your driving record; if you have a lot of accidents, you are statistically more likely to die young, which means you will be paying higher life insurance premiums.
Because women have a higher life expectancy expectation, they will pay a lower life insurance premium than men. Besides life expectancy, men are more likely to have high risk jobs, which make men more likely to die while their policy is in effect.
In conclusion, the life insurance industry goes to a whole lot of time and trouble to determine your life insurance premium. While this is necessary to make the company more profitable, in the end it keeps the price of premiums down for everyone.