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The Life Insurance Blog

Helping millions of Americans become educated
in making decisions about their life insurance needs


The Way Most People Think About Life Insurance Rates Is Broken

Apr 25, 2016 9:16:00 AM


Life insurance is usually not a favorite discussion topic for most people. Who wants to think about what life would be like when you (or your loved ones) are no longer in the picture? Apprehension over life insurance rates, coverage and need are very common for most people.  But planning for the future as a responsible adult should include  speaking with a life insurance advisor to help understand the benefits.

The reality is, planning for the coverage needed to assist loved ones after your passing can be comforting. Knowing that loved ones will not be forced to deal with an unnecessary financial burden can provide a sense of relief.

Overestimating the Cost of Life Insurance

Most Americans don't purchase life insurance simply because they think it costs too much. LIMRA recently released its Insurance Barometer Study, which showed that 80 percent of consumers misjudge the cost of term life insurance and Millennials tended to overestimate the cost by as much as 213 percent. This illustrates that most consumers think that life insurance is much more expensive than it really is.

Underestimating Your Coverage Needs

Unfortunately, there are a lot of misconceptions about life insurance coverage needs. Some people believe that the group plan offered by their employer is adequate, yet the limits are often very low, and the insurance doesn't go with you if you leave your job. Even single people and stay-at-home spouses need life insurance, as there are obligations and potential debts to be covered if you are no longer around, not to mention burial expenses.

Life Insurance Cost Factors

What many people don't realize is that there is a long list of factors that determine the rates you will pay for life insurance coverage. The younger you are when you purchase a policy, the better off you'll be. CNN Money estimated that a 35-year old would pay a 27 percent higher premium than a 25-year old. Aside from age, other factors that can influence the cost of life insurance include gender (men pay slightly more), smoking, drinking, health history, family health history, driving record, and lifestyle. The underwriting process for most carriers includes a medical exam with standard tests. Also, if you are an avid skydiver or mountain climber, expect that your rates will be higher than someone who prefers knitting.


Having adequate life insurance can bring you and your family peace of mind.

Types of Life Insurance

The last factor that will determine the rates on a life insurance policy is the type of policy that you choose. If you purchase term insurance, a policy that covers you for 30 years as opposed to 10 years will be more expensive. Also, the higher the death benefit (the amount paid out to your beneficiaries) on the policy, the more you will be charged for the coverage. Finally, policies such as whole life are going to be more costly than term life insurance but usually also have a savings component.

Many people avoid getting life insurance because they mistakenly believe that it will be too expensive or that they don't need coverage. While many factors affect life insurance rates, policies are affordable and securing coverage provides peace of mind that future obligations will be met. We'd love to help answer any questions you might have. Please contact us with any questions or simply get started today with our convenient term life calculator.

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Topics: Term Life Insurance, Life Insurance, Millennials, Trends