Save Money with Term Life Insurance Rates

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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When you get a quote on term life insurance, you will be asked a few important questions about your health, physical condition, and habits / activities which are used in life insurance underwriting to assess your risk level. A life insurance company makes money on term life insurance if you survive and pay premiums throughout the duration of the policy. If you are healthy and likely to live out the duration of your policy, your premium rates will be lower because you are likely to pay all of them. If, however you have significant health concerns that present a risk of premature death during the policy’s term then your term life premiums will be higher because you may pay less of them and create the need for the life insurance company to pay out a death benefit.

TIP: If you want better rates on term life insurance, get healthier! Smoking, excessive drinking, and being overweight can have a negative effect on your health and your term life insurance rates.

How Insurance Companies Set Term Life Rates

Your cost of life insurance is determined by Insurance Actuaries. Actuaries (mathematicians) have calculated your rates using data on how frequently the company pays out death benefits for customers like you. Your insurance company will categorize you based on your:

  • Age: As you age, you move into different risk groups. This is unavoidable, but it will cause your term life rates to be higher in your older years.
  • Height / Weight: Insurance companies calculate whether or not you are overweight or obese based on your height and weight. If you are considered overweight, the insurance company will set higher rates.
  • Smoking / Drinking Habits: If you drink excessively to the point where historical data suggests health concerns, your company will increase your term life rates. Similarly, if you smoke, then your term life insurance rates will be considerably higher.
  • Medical History: Before you finalize a term life insurance plan, you will need to grant the company access to your medical records. If you have any diseases or recurring health red flags, your term life rates can go up. You may be asked to submit to a medical exam when you apply for life insurance so the company can assess your health.
  • Cholesterol Levels: Bad cholesterol is a common health risk that insurance companies use to determine your term life rates.
  • Occupation: If you work in an dangerous profession, or a profession that puts you in risky situations, then your term life insurance rates will be higher.
  • Hobbies: If you have dangerous hobbies, such as piloting planes or rock climbing or wrastlin’ alligators, then your term life rates can be higher even if you are in otherwise perfect health.

Each insurance company may have additional factors that they will consider when setting your term life insurance rate, so be ready to answer all of their questions and give personal information when you apply for a term life insurance policy. Based on your risk factors, you will be assigned into a rate category:

  • Preferred: A category for healthy individuals who do not present a health risk. Preferred term life rates are the cheapest premium rates available.
  • Standard: A category for people who are healthy, or have minor health problems, but may engage in dangerous activities or are overweight with higher cholesterol. Standard term life rates are affordable, and reserved for people with some concerns but not major red flags
  • Sub-Standard: Sub-standard term life rates are for individuals with significant health concerns such as smoking, bad medical history, obesity, etc. These term life rates are going to be the most expensive.

Companies have various sub-categories of these categories, but in general you can expect to see one of these terms in your term life insurance rate quote. If you have any questions about your term life insurance rate, contact an experienced insurance agent.

Term Life Insurance Rate Increase

Your actual term life rate can be higher than your initial quote. Let’s say you were quoted a price for a 20 year term life insurance policy for 300,000 at $30 a month. This was a rate quote based on you being a male, 35 years of age, non smoker and weighing 190. You advised them in your preliminary term life rate quote that you have never had a terminal illness, you have never smoked and that you are HIV free. You received a quote at their preferred rate. You fill out the application and the insurance company sends a medical company to come to your work place and take your blood, take your blood pressure, weigh you on their portable scale and swab your mouth for nicotine and drugs testing.

You are notified by your agent or the insurance company that after underwriting review, your final rate quote premium is $45 dollars a month. They notice that your blood pressure was elevated and that your medical records show in your last visit to the doctor, he was concerned about your blood pressure. You also stated on your application in the area of family history that both parents had high blood pressure and that your father had a heart attack in his 40’s. Based on this you were moved from the preferred rate category to the standard rate category which changed your monthly premium amount.

Although you answered all the questions in your preliminary term life rate quote accurately, further underwriting review created a change in your rate class. This can also happen to the point of being changed to sub standard (poor rate class) to being denied insurance all together if they feel you are a poor risk.

TIP: If your term life insurance rate has changed after you have filled out an application, you
are free to shop around for a different quote. However, you need to keep in mind that filling out multiple life insurance applications is a red flag that can cause your rates to increase. Talk to an agent and be sure you can get a better price from a different life insurance company before you fill out multiple term life insurance applications.

How to Reduce Your Cost for Term Life Insurance

There are some things you can do to reduce your term life insurance quote. While it may be difficult to make changes to your occupation or medical history, there are some things that you can focus on:

  • Staying healthy is a huge factor. You are not able to do anything about past family history, but you are able to do something about your health NOW! Keep your weight within normal limits for your height and age. If you smoke, quit! Most insurance carriers will focus on your habits for the last 12 months, so you can get a better rate even if you used to smoke. Exercise, healthy eating, and fewer bad habits is an easy way to improve your health and reduce your term life insurance rates!
  • You can reduce the number of risky activities that you participate in. Dangerous hobbies can increase your term life insurance rates, so take steps to reduce the risks you take.

TIP: If you have a higher rate due to health concerns such as smoking or obesity, ask your insurance company if you can be re-evaluated as you go through your policy in order to have your rates reduced. Then you can address the concerns and work to get a better rate.

Once you understand how term life rates are calculated, you will know what to look for on your insurance quote. Click here to get a term life insurance quote today from a reputable insurance agent in your area.

Read more about finding the right type of life insurance by clicking here.

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