Finding an cheap life insurance policy that meets the financial needs of an individual can be hard. Not only are there various options to choose from, but even these options have options. For consumers to obtain the best policy at the best price, they must consider many factors before zeroing in on the cheapest policy that meets their needs best.
To make the job easier, noexam.com has prepared this guide to help those shopping for a low-cost term life insurance policy that best suits the budget and needs of the life insurance buyer.
Also, policies requiring medical exams are cheaper than no exam policies. The tool below offers prices for comparison.
For most life insurance shoppers, the cost is usually the defining factor that dictates the final product or services purchased. But the average consumer has several misconceptions when it comes to the cost of a typical life insurance policy.
According to a study by LIMRA, many people in the US never purchase life insurance because they believe it is too expensive. However, the average person also significantly overestimates the cost of term life insurance.
For instance, a healthy 30-year-old male can get a 30-year term policy with a face value of $250,000 for $240 a year. A healthy 30-year-old female can get the same policy for just $206 a year.
It should be noted this is the average cost of a term life policy calculated based on the premiums charged by insurance providers for people in the low-risk category. The actual cost of an individual’s policy could be higher if they are older or have pre-existing conditions.
Age is the number one factor impacting life insurance rates. In the example mentioned above, the $250,000-policy for a 30-year-old costs $240 a year, but the same policy will cost a 40-year-old $384 a year. A 50-year-old will pay $913 a year for the same policy.
The risk of mortality increases with age. Thus, the older the buyer is, the more expensive the policy will be.
This is why experts say that you should get insured when you are young.
Men generally pay more for insurance than women. Statistically, the average woman has a higher life expectancy and a lower risk of mortality compared to the average man(Source). Insurance companies take these factors into account while determining the cost of a policy. Thus, an insurance policy for a female is likely to cost 15 to 40 percent less than the same policy for a male.
The length of the term is also a determining factor in the cost of a life insurance policy. The longer the term, the more the policy will cost. A 30-year policy will cost more than a 10-year policy, but it provides coverage for a longer period of time.
Thanks to the advancements in medical science, the average life expectancy in the US has increased considerably over the years. So, even for those in their 40s or 50s, it makes sense to opt for a policy with a longer-term length that will continue through to post-retirement.
The amount of coverage a policy offers will affect the price of the premiums. The higher the coverage amount of a policy, the higher the premiums will be. Using the same example from above, a $250,000-policy for a 30-year-old male averages around $240 a year, but a $500,000-policy for the same guy costs about $400 per year. Whereas a $500,000 policy for a 30-year-old female jumps to $335 annually (from about $200 per year for a policy with $250,000 in coverage).
Apart from age, this is the most important factor insurance companies consider when issuing a policy. Underwriters tend to review the past medical history of applicants as well as their current health status to determine insurability.
Insurance companies generally determine mortality risk based on weight, blood pressure, blood sugar levels, and cholesterol levels.
Applicants who are overweight and/or have a disease or medical condition such as diabetes, hypertension, or heart disease, are likely to pay more for insurance compared to people without pre-existing conditions. Even a family history of any of these health issues can increase rates.
In order to get the cheapest rates, applicants must take a medical exam during the application process, so the provider can verify the applicant’s health status.
Smokers have a higher risk of mortality and lower life expectancy compared to non-smokers. Thus, smokers can expect to pay significantly more than non-smokers for the same amount of life insurance.
For example, a non-smoker is likely to pay around $11 a month for a 10-year term policy with a face value of $250,000. A smoker, on the other hand, will pay as much as $30 for the same policy.
Non-smokers who have a history of smoking but have quit the habit are likely to pay less than a smoker, but possibly more than a non-smoker who has never smoked for the same policy.
An applicant with a “high-risk” profession is going to pay more for life insurance. For instance, insurance companies consider professions like farming, roofing, power line installation and maintenance, mineral and natural resource extraction, logging, commercial fishing, and construction to be high-risk. All these jobs have a higher fatality rate and overall rate of accidents compared to other jobs.
An individual’s hobbies can also have a major impact on insurance costs. Applicants who have hobbies that are considered dangerous such as skydiving, base jumping, scuba diving, skiing, snowboarding, mountain biking, and trekking are likely to pay more for insurance, even if they are in excellent health.
Based on the aforementioned factors, insurance companies classify applicants as “low-risk,” “high-risk,” or somewhere in between, depending on their underwriting guidelines.
Let us now take a look at the best companies that offer life insurance at very competitive prices.
Alabama-based Protective Life Insurance Company has been in business for over 100 years. It has an A+ rating from A.M. Best, AA- rating from Standard & Poor’s, A+ rating from Fitch, and an A1 ranking from Moody’s.
Founded in 1909, Mutual of Omaha offers a wide range of insurance products for individuals as well as businesses. It has an A+ rating from A.M. Best, A+ rating from Standard & Poor’s, and an A1 ranking from Moody’s.
North American Company for Life and Health Insurance was founded in 1886. It is one of the most recognizable names in the industry today, and is a leading provider of insurance products and annuities in the country. It has an A+ rating from A.M. Best, A+ rating from Standard & Poor’s, and an A+ rating from Fitch.
Principal Life Insurance Company was established in 1879 and is based in Iowa. It has an A+ rating from A.M. Best, A+ rating from Standard & Poor’s, AA- rating from Fitch, and an A1 rating from Moody’s.
Maryland-based Banner Life Insurance Company was founded in 1949 and has managed to become a leading insurance provider in the country. It has an A+ rating from A.M. Best, AA- rating from Fitch, and an AA- rating from Standard & Poor’s. See Banner life insurance rates.
Here we will break down the average cost of life insurance policies offered by these companies. The rates given below approximate what a 40-year-old female in good health can expect to pay per month for a life insurance policy premium from these companies.
|Mutual of Omaha||$11.99||$17.24|
All five of the companies listed above are financially stable, have been in business for a long time, are rated highly by agencies and customers alike, and are known for their affordably priced products. For individuals looking for a low-cost insurance provider, any one of these companies will be a good choice.
At the same time, applicants should remember insurance policies are highly individualized. The rates might differ from one person to another depending on the factors mentioned above.
Insurance is necessary regardless of your age and health condition. Even older individuals who may have pre-existing conditions can still get insured, as there are companies that offer no-exam, no-questions-asked policies that issue coverage for applicants with less than perfect health.