Is Life Insurance Affordable?

Is Life Insurance Affordable?

A monthly balance sheet with a pen lying across it to accompany the article about how to choose affordable life insurance.

Is Life Insurance

Is Life Insurance Affordable?

Many variables determine the premium you pay, which means there are affordable options for different types of people at a variety of price points.

But if you have dependents, it’s crucial you have life insurance to provide for your loved ones.

As you go about shopping around for a policy, here are some factors to keep in mind that can affect your premium rate.

Factor #1: The Type of Life Insurance You Choose

Some life insurance policies cost more because they provide more features.

Permanent policies provide coverage for life and some, like whole life insurance, can earn extra dividends you can put toward retirement, college tuition, or reinvest.

Term life policies provide coverage for a set amount of time like 10 years, 20 years, or 30 years. They’re less expensive than permanent policies and can be converted to a permanent policy later.

Factor #2: Your Age and Gender

Obviously, older people pose a bigger risk to insurance companies than younger people, which means they pay more. The younger you are when you buy a policy, the less expensive it is.

And gender is a factor because data shows that males tend to die younger and work riskier jobs.

Factor #3: Your Health & Hobbies

Your health has a profound impact on your ability to obtain a policy and how much you’ll pay for it. Insurance providers will look at your habits and you and your immediate family’s medical histories to get a clearer picture of your health profile.

Although you may not be able to do much about your medical history, you can do something about life-threatening habits. If you smoke or drink excessively, your policy will cost more.

What you may not know is that your hobby may also affect your eligibility and your premium—especially hobbies that involve diving, flying, and climbing.

Factor #4: Your Income

It stands to reason that the more you make, the more insurance you can afford. However, what you spend your money on affects how much money you have to spend on it.

On average, people with families tend to earn higher incomes, but have more expenses. They’re also the ones who may benefit from life insurance the most. Term life insurance  is the most affordable comprehensive option available.

That is not to say single people can bypass life insurance altogether. You don’t want to saddle your loved ones with burial expenses or outstanding debt.

Factor #5: Your Occupation

It seems unfair to penalize those who make our lives safer and easier, but life insurance providers consider dangerous jobs like firefighters, police officers, construction workers, and pilots as high risk.

If you think your occupation may incur higher premiums, an insurance agent will be able to steer you toward an affordable life policy.

Factor #6: Catastrophic Events

Things like inflation, pandemics, dangerous environments, and mortality rates can affect your premium, making them higher or lower depending on what’s going on in the world. The higher the risk, the more you pay.

Factor #7: Your Financial History

Life insurance companies don’t look at your credit card history, but they do look at bankruptcies and periods of employment to assess your ability to pay your premiums.

How Can I Lower My Life Insurance Rate?

While a few of the factors above are things beyond your control, there are some things you can do to lower your premiums:

  • Lose weight
  • Quit smoking
  • Decrease your alcohol consumption
  • Schedule and attend regular medical appointments
  • Decrease engagements in risky hobbies; instead of monthly dives, go on annual dive trips
  • Buy a policy while you’re young and healthy to lock in lower rates.

How Much Life Insurance Do I Need and How Much Will It Cost?

The amount you need to adequately protect your family depends on how much you think they’ll need if they lose your income. Consider things like your mortgage, college costs, retirement, and funeral costs.

It may look like life insurance companies charge arbitrary rates, but that’s not true. They rely on scientific data to provide the best rates possible. They need coverage to protect you and their other clients every bit as you do to protect those important to you.

Life insurance is an investment that benefits everyone

Nick Trawinski - Founder of PolicyWand
Nicholas Trawinski

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