What You Need to Know About Life Insurance
How much will life insurance cost me?
Policyowners pay a certain amount, called premiums, to keep their life insurance policies inforce, or active. Premiums will differ between insurance companies and they will also differ between the types of insurance policies and the amount of coverage you get.
The insurance company determines premium costs by using statistics and mathematical calculations done by the actuarial department of the insurance company. But not all insurance companies use the same pricing guidelines. This is why working with a life insurance broker is the best way to ensure you’re getting the best price on a life insurance policy.
Life insurance brokers work with many different life insurance companies, versus being loyal to just one. Brokers are able to shop around to ensure you’re getting the best deal based on your risk factors.
When you apply through Quotacy, your agent reviews your application and makes sure you’re matched with the insurance company that will offer the best rate.
Let’s take a look at some examples to help illustrate the cost of life insurance.
Example 1:
James is 35 years old and lives with his wife Anne. They are currently working on paying off their $250,000 mortgage and he also has $50,000 left in student loans and $10,000 left to pay on his truck. He and Anne don’t currently have any children nor do they plan to.
Here are his answers to the life insurance needs calculator questions:
What is your annual income? $70,000
How many years of income do you want to replace? His wife works full-time and without a mortgage payment, he decides she would be able to become financially stable again after two years.
How much do you owe on your mortgage? $250,000
How much additional debt do you have? $60,000
How much do you want to contribute to children’s college expenses? $0
How much money will be needed for a funeral/burial? $10,000
How much money do you currently have in savings and investments? $25,000
How much life insurance do you already own that you plan on keeping? $0
Using the calculator, James’ insurance needs equal $450,000 in coverage. He would like to have this coverage last until he and Anne hit their retirement years, so he opts for a 30-year term. Using the quoting tool on Quotacy, we can estimate his monthly premium payments to be about $32, if he is a non-smoker and does not have any health issues.
Recap: A $450,000 term policy that will last until James turns 65 will cost him $32 per month.
Example 2:
Tim is 30 years old and lives with his wife Lucy and their two young children, one of which has been diagnosed with Down syndrome. Because their child is likely to need special care for the remainder of his life, Tim decides on whole life insurance to make sure the family will always be financially protected.
A $250,000 whole life policy for a healthy 30-year-old male has an estimated monthly premium of $238. As the policy matures, cash value will accumulate that Tim can use to pay for any needs that arise, such as medical bills.
Accessing the cash value will decrease the policy’s death benefit, however, unless he pays back the loan against the cash value before he dies.
Owning a whole life insurance policy ensures that when he dies, there will be funds available so his child continues to receive the best care.
Whether you only need simple term life coverage, or have more complicated needs better served by a permanent policy, Quotacy can help.
» Compare: Term life insurance quotes
