life insurance costs

Life Insurance Costs Explained

February 22, 2022

February 22, 2022: Life insurance is frequently recognized as one of the best investments you can make, yet according to the Insurance Information Institute, 46% of Americans do not have a policy. There are many factors that might contribute to this deficit, but a lack of knowledge surrounding life insurance policies might be to blame. Most people understand how car insurance works, for example, but fewer are familiar with the protocol of a life insurance policy. How are life insurance costs calculated? How much does life insurance usually cost? Read on to find the answers to these and other essential life insurance questions.

Characteristics of Insured

Just as car insurance premiums are based on your characteristics as a driver — and thus the risk you pose — a life insurance policy is based on the characteristics of your lifestyle. When you apply for a life insurance policy, you’ll likely be asked to submit a questionnaire that includes questions about whether you drink or smoke, any history of diseases, and any medication you may take. These questions help the policy underwriters assess your general risk, and your risk is directly proportional to the cost of your policy.

Family Medical History

In addition to questions about your own medical history and lifestyle habits, your insurer may ask questions about your family’s medical history. A questionnaire may inquire, for example, whether there is a history of cancer or heart disease on either side of your family. These questions are used to further calculate your risk when writing a life insurance policy. If you have immediate family members with serious illnesses, you might face a higher premium due to perceived higher risk.

Company Issuing Policy

You and your characteristics aren’t the only factors that determine the cost of a life insurance policy. Ultimately, the cost may also vary widely based on the company issuing the policy. Different insurers have different underwriting protocols which means that premiums can be dramatically different for seemingly similar coverage. In some cases, an insurer with a more invasive questionnaire may offer a lower rate if they assess you to be a low-risk insured. It’s best to do research and get multiple quotes before committing to a policy.

Potential Cash Value Growth

Another factor that may impact the cost of a life insurance plan is its potential for cash value growth. If you opt for a term life insurance policy, you will be covered for a set period with a set premium and no growth in cash value. If you choose a whole life policy, however, you may eventually enjoy the ability to access the policy’s cash value as it continuously grows. This advantage is attractive to many, but it may also come with a bigger price tag.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.