How is life insurance priced?
The cost of insurance can vary from individual to individual and policy to policy. Monthly premiums for a ten-year term policy for a healthy thirty-year-old can cost around $13 per $100,000 of coverage. However, premiums for a sixty-year-old smoker can be over $100 each month for $100,000 coverage
You may not be flush with funds for investing in expensive life insurance policies and may therefore require term life. Camlife Financial Corp has outlined a few tips and tricks to help you keep your family covered by life insurance with minimum costs.
Remember it is highly dependant on age and health
Age is a primary determinant in life insurance rates, as the greater your age, the greater your risk of death. In other words, for the same term life policy, a forty-eight-year-old will almost always pay more than a thirty-two-year-old, even if they are in equally excellent health.
Choose a life policy that evolves with your needs
Our lives change from year to year. Similarly, our life insurance policy needs to evolve to reflect and cover these modifications, ensuring the beneficiary is protected at all times. Choosing a life insurance product that changes with your needs is a wise idea and one that should not be overlooked.
Determine the amount of life insurance you require
The primary purpose of life insurance is to pay off debts and replace income for dependents of the deceased. It would help if you did a needs analysis to determine how much money your family would need to maintain their standard of living in the event of your premature demise. A commonly used guideline for someone in their thirties is twenty times their annual earnings after-tax.
Determine the length of time you require insurance coverage
Life insurance is not about “putting a value on your life.” Your life is, of course, priceless. The purpose of life insurance is to provide financial resources to your dependents if you pass away and are no longer able to provide for them. So, if you still have children who are dependent or have a complicated marriage or relationship situation, your life insurance policy needs to be in place only as long as it makes sense.
Determine any health issues or impediments to underwriting
Specific health issues can have a negative effect on the cost of your life insurance and, in some cases, make it harder than usual to get insurance coverage at all. For example, diabetes, even in the best-case scenario, equals 150% the cost of standard insurance, with the same applying if you’ve had non-metastatic cancer only once and have been cancer-free for three or more years.
Buy term policies of various lengths
While term life insurance is affordable, you do pay more for a thirty-year policy than you would for a twenty-year policy. But, if you are a bit older when you purchase your policy, that price spread can be even more attractive when comparing a twenty-year term versus a thirty-year term because rates increase as you age.
Match the term length to the declining mortgage balance
As you pay off your home or business mortgage, and the amount you pay in interest similarly decreases, it is wise to match the term length of your insurance policy. For precisely this purpose, a mortgage life insurance policy is a term life policy explicitly designed to repay mortgage debts and associated costs in the event of the borrower’s death. A mortgage life insurance policy pays a death benefit to the lender if a borrower dies during the term of a mortgage loan. These term policies are structured to match the number of years remaining on a mortgage, with death benefit amounts that adjust periodically to reflect the reduced mortgage balance left after each year.
Only buy the insurance that you need
While insurance can help in many different ways, it is critical to sign up for only insurance products that you genuinely need. Buying insurance for its sake is a waste of money as you will be paying towards an advantage that you will probably never avail.
Ensure that insurance coverage lasts long enough
Keeping in mind that life can throw us a few curveballs, it is a wise decision to keep at least some insurance coverage until around the age of sixty-five. Having an over-sixty life insurance policy in place can help give you and your family peace of mind, and if you have the policy for one or two years, your loved ones could receive a cash sum in case anything happens to you.
For more tips on how to avail of the best insurance products on a budget, reach out to Camlife Financial Corp. As reliable experts in the insurance industry, our goal is to understand your needs and exceed your expectations. We believe that everyone’s situation is unique, and we take the time to get to know our clients. Once we determine what you require, we devise a plan and search the market for insurance companies and policies that will meet your needs. Besides finding insurance covers for families and businesses, we also help these clients with their financial planning and investment needs. Our top-of-the-line financial services are available to clients across Vancouver, Richmond, West Vancouver, North Vancouver, Burnaby, Surrey, White Rock, Langley, Coquitlam, Maple Ridge, and New Westminster, BC.