Term Life Insurance Prices

About Term Life Insurance Prices

Term life insurance rates are calculated using what is called “an actuarial analysis of relevant data”. Now, that’s quite a mouthful, but what it really means is that insurance companies hire math geeks (a term of endearment!) to crunch the numbers and calculate the prices that they have to charge different groups of people in order to properly reserve for potential death benefit payouts as well as company overhead/expenses and profit. Once these numbers have been crunched, insurance companies assign rates for various groups by age, sex, heath status, tobacco use, family medical history, etc.

The History of Term Life Insurance Prices

These graphs provide a good overview of the history of term life insurance prices. If you take a few minutes to look at them, one thing clearly stands out. Rates for “Preferred” risk non-tobacco users have dropped considerably in the past 15 or so years. There are several technical reasons for this (e.g., the reliance on updated mortality tables that show longer life expectancy) and there are some business reasons for this. The world of life insurance is quite competitive, and companies know that insomuch as term life insurance is a commodity product, price is the most important consideration when consumers make a choice of which carrier to use. So insurance companies do everything they can to cut costs and remain competitive. This, of course, is a “win” for consumers.

Another thing that you will notice is that term life insurance prices for smokers (tobacco users) have increased (or at best remained level) over that same period of time. I won’t make any further comment on this other than to say that smoking is a “life span reducing activity” and the insurance companies know it. Incidentally, if you have recently quit smoking, the length of time you must remain “tobacco free” before you are considered a non-smoker varies from insurance company to insurance company. Contact us if this describes your situation and we can help you find the right carrier for you. There is no sense in paying smoker rates (which can be more than double the non-smoker rates) if you can get a good company to consider you for non-smoker rates.

The Next Step

If you are in the market for a new life insurance policy, we can help. No matter what your needs are, we can help you find term life insurance prices that fit your needs and your budget. Get in touch with us if we can answer any questions or help you buy your next policy.

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About The Author

Richard Eddy

Founder of Rates4Term.com and Cona Financial Group Richard Eddy has been assisting clients with their life insurance needs since 2005. He is an expert helping people find the right policy to fit their specific situation. In addition to insurance planning, he is also experienced in a wide range of financial planning topics including investment and portfolio analysis, tax planning, retirement planning and estate preservation strategies. You can call Richard toll-free at (877) 883-3561.