Thursday, September 11, 2014

What factors play into your life insurance rate?

Do you wonder if you need life insurance, or wonder if your age or health make it a good choice for you?

As a general rule, it's best to purchase life insurance when you're younger and healthy. It makes sense that as we get older, life insurance companies view older potential policyholders as greater risks, and those risks are met with a higher premium. The younger you are when you secure the policy, the more affordable it will be. But no matter your age, if you need life insurance -- and it will help financially secure the future for your spouse and dependents -- you will find it to be worth the investment.

While age is one of the primary factors in determining life insurance rates, there are others to keep in mind, too. Below is a list of items that typically affect life insurance premium calculations. Which of these apply to you, and which of these can you change?
  • How healthy are you? When you apply for coverage, your current health condition is factored into your life insurance premium. Results from recent medical questionnaires or medical exams usually are factored in, as may be the health of your family.
  • Do you live a healthy lifestyle? Do you smoke or use recreational drugs? If you do, expect your life insurance premium to be higher.
  • What do you do for a living? If you are in a high-risk occupation, such as a firefighting or law enforcement, it may affect your life insurance rate.
  • The type of policy also plays a role. Are you part of the group requesting life insurance, are you seeking an individual policy? Are you looking for term or cash-value insurance? The type of insurance policy you seek can have a bearing on its rate.
As we mentioned, your age at the time of application for life insurance coverage is a critical factor. The number of years you'll be around to pay into the policy factor greatly into the policy rate, and some policies will become better options for you. If you're older, you may find that term life insurance is a better choice, for example. Contact us at Ryan Insurance & Financial to learn more.

Advice for newlyweds: Update your insurance policies

When the wedding bells ring and the cake’s been eaten, many newlyweds realize it’s time for less glamorous tasks that should be part of marriage, too -- such as updating their insurance policies.

It’s important to review your insurance options with your spouse to make sure you’re getting the best coverage at the right price. It’s also extremely important to make sure life insurance is on your list, in order keep your new family financially secure and in the event you’re not around to care for them.

Further, the younger you are when you apply for insurance, the lower the premiums. If your family plan includes children, it’s best to purchase a policy that will keep your family covered until they’re college graduates.

Some insurance experts describe life insurance as "renting a safety net," and "term" life insurance fits well within that category. With term life insurance, the owner pays a fixed premium, toward a concrete payoff over specific time, typically 5, 10 or 25 years. If the policyholder dies during this period, the insurance company pays the promised amount. Alternatively, when the policy reaches its deadline or expiration, the coverage ends and a new policy must be secured to continue coverage.

Generally, term life insurance is more cost effective for younger families, and is most often secured by people in their 20s, 30s and 40s.

A second variation of life insurance is referred to as "cash-value" life insurance. With cash-value insurance, the policyholder pays the premium for the rest of his or her life, unless they decide to cash it in and received the cash value as a lump sum. The cash value of the policy is different from the policies face amount, however: Face amount is the amount of money that will be paid at the death or policy maturity, while cash value is the amount available if the policyholder surrenders a policy before its maturity or his or her death.

Cash-value, or whole life insurance, is also known as permanent insurance because it's good for an indefinite period of time. Three types of cash value insurance include whole life, universal life, and variable life. Call us at Ryan Insurance & Financial at 386-738-2000 to learn more about them.

Discussing your need for life insurance shouldn't be a scary proposition; if anything, it should bring you more peace of mind, especially at the start of your new marriage.