Best Rates for Life Insurance
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Best Rates for Life Insurance
When you are shopping for an insurance product, you do not just want to find good rates, you want to find the best rates. Life insurance is a vital form of financial protection that will act as a proverbial lifeboat for your family members who may begin to drown under bills and debt if you were to pass away in an accident or after falling ill. While all forms of life insurance will provide you...
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When you are shopping for an insurance product, you do not just want to find good rates, you want to find the best rates.
Life insurance is a vital form of financial protection that will act as a proverbial lifeboat for your family members who may begin to drown under bills and debt if you were to pass away in an accident or after falling ill.
While all forms of life insurance will provide you with an amount of protection, there are several different types of policies and riders that you can choose from that each carry their own range of rates.
To find the best insurance rates, you need to first take time to gain a basic understanding of the industry and marketplace, the life insurance products that are available to you, and how to choose the best insurance carrier that is trusted by prepared consumers just like you.
This guide will make learning about the marketplace and life insurance products all the easier for you so that you do not have to attend Life Insurance 101 courses just to feel confident that you are buying the right policy from the right company.
Here is your straightforward and easy to comprehend consumer guide to life insurance and rates. Be sure to use the FREE comparison quote tool at the top of this page!
Why do life insurance rates vary so much from one product to the next?
If this is your first time contemplating the idea of buying insurance, you may get overwhelmed when you look at a long list of rate quotes for coverage from several insurers.
It is perplexing to think that a dozen insurers could charge more than a dozen different rates for life insurance products that all have a death benefit of $250,000.
Even though the death benefits of each of the plans with the largest life insurance carriers are the same, is the policy types are different you are going to pay a very different rate because of how that type of product works.
A level guaranteed term plan is priced differently than an annual term; just like a Whole Life insurance policy is priced differently than another permanent plan called Universal Life.
You must understand how each of these policies work before you can expect to pay less for a plan that naturally costs more.
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Guaranteed Level Term Life Insurance Plans and Their Rates
A guaranteed level term plan is a temporary form of coverage that offers level death benefits for a level, guaranteed premium. The premium is established at the age you were at the time of the application and will not change until the term ends and must be renewed at your new age.
For example; If you applied for a level 20-year term policy for $100,000 that had guaranteed premium, you would pay the same rate each year until you reached age 40. At that time, if you chose to renew the policy, you will pay a new rate at your new and more risky age.
Annual Term Life Insurance Plans and Their Rates
Annual term plans only guarantee premiums for a single year. When that year is up, you must them pay premiums at your age one year older if you choose to renew.
Every year that you get older, your rates will go up.
In the past, annual term life plans were extremely popular because you were not required to answer medical questions or take underwriting exams for approval. Because there was no medical underwriting, the rates for these specialty term plans were higher than the rates for a level term that lasted five years.
As you age, the rate can dramatically go up from one year to the next and this is why annual terms are only practical in certain situations.
Whole Life Insurance Plans and Their Rates
Whole life insurance is a permanent life plan that does not expire or end unless you do not pay the premiums.
Instead of paying for just life insurance, you will pay for both life insurance and an investment component that can be accessed in the form of a withdrawal or loan while you are living.
The premiums that you pay towards insurance are level and do not fluctuate because you are earning a steady rate of interest on the premiums that are being paid.
The only way that your rates are able to stay the same is by the company projecting the expense at the inception of the plan by reviewing the specific rating factors that can affect life expectancy.
As you pay the premiums, expenses for the policy are deducted and cash value is added to your cash account and will rise over time. This is why cash accumulation policies carry rates that are as much as 10 times higher than term plan.
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Universal Life Plans and Their Rates
Much like a traditional whole life plan, a universal life policy has cash values and an investment component. The major difference is that the premiums that you pay are not level and can change over time based on how you fund the insurance part of your policy.
The reason why the premiums can change is because you decide how much to put into the policy.
If you choose the minimum amount, the amount you pay as the cost of insurance rises can go up. It can be dangerous to pay minimum amounts because interest rates are not guaranteed and if the cash value cannot pay the cost of insurance as you age, you may have to pay the difference out-of-pocket.
Rates for universal life are flexible, but like whole life they are dramatically higher than a term plan’s rates.
Why do rates for the same product vary so dramatically?
Now that you understand how the type of insurance product that you choose can dictate your expenditures for insurance, you need to have a basic understanding of the life insurance marketplace so that you can learn how rates differ from carrier to carrier.
The insurance marketplace is not only a competitive one, it is also a highly regulated one.
Insurers must answer to the National Association of Insurance Commissioners and also their state regulatory body based on where they are doing business. Before the company is able to set rates and risk factors, they must have their rates filed and approved by with their state’s Department of Insurance. This is procedure to protect consumer interests when buying financial products.
While the rates must be approved, insurers are given leniency in deciding which type of target market they would like to buy their products. If they want to sell to low-risk named insureds, they will have the most competitive rating band for term insurance plans for people who have no medical issues and who have a long life expectancy.
Some insurers do not mind taking on more risk if it means that they can earn more premiums and invest these premiums in stocks and high-yield bonds.
These companies have products that cater to the needs of seniors, people with pre-existing conditions, or people who participate in hazardous activities.
The money that the company earns in the investments will be used to offset the risks, but the rates that company charges will be higher than the rates a traditional insurer would charge for someone who is in a Preferred or Standard rating category.
How can you find the life insurance best rates?
Now that you understand how the type of insurance can dictate the rates that you are quoted, you need to decide which type of insurance will help you achieve both your short-term and your long-term goals.
If you have a temporary financial obligation, for debt, dependents or replacement income, you have a need for a term insurance plan.
If your need is to cover estate taxes or to pass on a legacy to your dependents and other loved ones, you will always have that need and that means that a permanent plan is more appropriate.
Once you have settled on a term or permanent plan, you need to take time to comparison shop so that you can find that reputable company that is selling products priced to attract consumers in your rating class.
You will need to compare the insurance quotes of apples to apples coverage with at least 3 to 5 companies before you can see if a rate is competitive. After doing this, you can adjust the benefit amount or change the product type if the product does not fall into your budget.
If you want to save time as you shop for the best rates, the best approach is to use an online rate comparison tool.
These online quoting systems will show you the rates charged by the insurers that do business in your state and offer the product that you desire.
Make sure to choose a financially stable company, and enter your information in the fields only a single time to find the best rates.
Use the FREE quote comparison tool located below!
Enter your zip code below to view companies that have cheap auto insurance rates.
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Best Rates for Life Insurance
When you are shopping for an insurance product, you do not just want to find good rates, you want to find the best rates. Life insurance is a vital form of financial protection that will act as a proverbial lifeboat for your family members who may begin to drown under bills and debt if you were to pass away in an accident or after falling ill. While all forms of life insurance will provide you...