Is Life Insurance Affordable?

Is Life Insurance

Is Life Insurance Affordable?

Many variables determine the premium you pay, which means there are affordable options for different types of people at a variety of price points.

But if you have dependents, it’s crucial you have life insurance to provide for your loved ones.

As you go about shopping around for a policy, here are some factors to keep in mind that can affect your premium rate.

Factor #1: The Type of Life Insurance You Choose

Some life insurance policies cost more because they provide more features.

Permanent policies provide coverage for life and some, like whole life insurance, can earn extra dividends you can put toward retirement, college tuition, or reinvest.

Term life policies provide coverage for a set amount of time like 10 years, 20 years, or 30 years. They’re less expensive than permanent policies and can be converted to a permanent policy later.

Factor #2: Your Age and Gender

Obviously, older people pose a bigger risk to insurance companies than younger people, which means they pay more. The younger you are when you buy a policy, the less expensive it is.

And gender is a factor because data shows that males tend to die younger and work riskier jobs.

Factor #3: Your Health & Hobbies

Your health has a profound impact on your ability to obtain a policy and how much you’ll pay for it. Insurance providers will look at your habits and you and your immediate family’s medical histories to get a clearer picture of your health profile.

Although you may not be able to do much about your medical history, you can do something about life-threatening habits. If you smoke or drink excessively, your policy will cost more.

What you may not know is that your hobby may also affect your eligibility and your premium—especially hobbies that involve diving, flying, and climbing.

Factor #4: Your Income

It stands to reason that the more you make, the more insurance you can afford. However, what you spend your money on affects how much money you have to spend on it.

On average, people with families tend to earn higher incomes, but have more expenses. They’re also the ones who may benefit from life insurance the most. Term life insurance  is the most affordable comprehensive option available.

That is not to say single people can bypass life insurance altogether. You don’t want to saddle your loved ones with burial expenses or outstanding debt.

Factor #5: Your Occupation

It seems unfair to penalize those who make our lives safer and easier, but life insurance providers consider dangerous jobs like firefighters, police officers, construction workers, and pilots as high risk.

If you think your occupation may incur higher premiums, an insurance agent will be able to steer you toward an affordable life policy.

Factor #6: Catastrophic Events

Things like inflation, pandemics, dangerous environments, and mortality rates can affect your premium, making them higher or lower depending on what’s going on in the world. The higher the risk, the more you pay.

Factor #7: Your Financial History

Life insurance companies don’t look at your credit card history, but they do look at bankruptcies and periods of employment to assess your ability to pay your premiums.

How Can I Lower My Life Insurance Rate?

While a few of the factors above are things beyond your control, there are some things you can do to lower your premiums:

  • Lose weight
  • Quit smoking
  • Decrease your alcohol consumption
  • Schedule and attend regular medical appointments
  • Decrease engagements in risky hobbies; instead of monthly dives, go on annual dive trips
  • Buy a policy while you’re young and healthy to lock in lower rates.

How Much Life Insurance Do I Need and How Much Will It Cost?

The amount you need to adequately protect your family depends on how much you think they’ll need if they lose your income. Consider things like your mortgage, college costs, retirement, and funeral costs.

It may look like life insurance companies charge arbitrary rates, but that’s not true. They rely on scientific data to provide the best rates possible. They need coverage to protect you and their other clients every bit as you do to protect those important to you.

Life insurance is an investment that benefits everyone

Rumor Has It Life Insurance Claims Are Up

Rumor Has It Life Insurance Claims Are Up.
What Does That Mean For You?

Rumor Has It Life Insurance Claims Are Up. What Does That Mean For You?

It’s no secret that the world is a more dangerous place than it used to be. And U.S. death rates are significantly higher—especially since COVID crashed onto our shores.

We’ve all suffered losses recently. Inflation, fires, floods, rising home insurance payments, loss of loved ones. One can assume these losses translate to higher life insurers’ claims.

Two insurance companies claim they have. according to a recent Crossroads Report, Lincoln National death benefit payouts increased an eye-popping 162% in 2021, almost one billion more than it paid in 2020.

A state insurance department annual statement from One America reflects a 40% increase in claims payouts in the third quarter of 2021. Prudential and Northwestern Mutual suffered higher payout percentages in 2021 as well.

Yet all has been quiet on the news front.

“I’m shocked that this is not a bigger story,” says Will Kibler, Managing Agent at PolicyWand. “If more people are dying you would think this would be a headline somewhere.”

Kibler says that the partners they do business with aren’t reporting the same losses. “They usually don’t lose money. But I will say that in general, most insurance companies are very protective of their mortality statistics. It’s just not something you see them divulging publicly. These companies—Lincoln especially—are in the rare position of having to explain their losses.”

A Lincoln press release states that the claims the company paid out were related to “non-pandemic related morbidity” and “unusual claims adjustments.” The release does not share the number of actual claims filed.

“I think these companies’ higher morbidity numbers are the results of a culmination of things,” says Kibler. “Drug and alcohol abuse rose exponentially during the pandemic. And there was a massive decline in health care throughout the pandemic.

“The economic dislocation associated with efforts to quell the spread of the disease may have had some negative health costs,” Kibler continues. “It looks like there was a drastic rise in the number of minorities who were affected.”

Whatever the reasons for the rise in payouts, Lincoln increased its sales by 42% and raised its premiums by 4%.

Does this mean those of us who want to buy life insurance face higher premiums? “It’s hard to say,” Kibler says. “There’s a lot of competition in the life insurance market. I think inflation will take a toll on premiums more than morbidity will.”

So, what can consumers do to keep from spending a fortune on life insurance in light of rising costs? Kibler advises against wasting time trying to find the right company with the right policy on your own. “Find a place that does the shopping for you. One that has access to a large chunk of the market and helps you find the best price.

“Rates for insurance do not vary based on where you receive your quote from,” continues Kibler. “But there are a few agencies that make it easier for the consumer to compare life insurance rates online and don’t require any contact information to compare quotes. There are also other options from agencies that gather information up front but also provide the ability to compare the same quotes online.”

Life Insurance for Daredevils with a Dangerous Hobby

Life Insurance
for Daredevils with a Dangerous Hobby

Life Insurance for Daredevils with a Dangerous Hobby

Jumping, flying, and diving are thrilling ways to get your danger on. But when it comes to protecting your family from financial ruin should your death-defying prove deadly, choosing the best life insurance to get can be an expensive game.

In addition to variables such as health and age, insurance companies consider dangerous hobbies when evaluating a life insurance application. Therefore, dangerous hobbies invite higher life insurance prices than your life insurance policy quote.

Some hobbies are more dangerous than others. Activities insurance companies do not deem risky enough to warrant a higher premium or denial include:

  • Cycling – including mountain biking
  • Skateboarding or snowboarding
  • Hiking
  • Skiing

No matter what your hobby, life insurance is critical to protect your family if you’re no longer around to provide for them—especially if you’re a thrill-seeker.

What Life Insurance Companies Consider a Dangerous Hobby

  • Flying activities: piloting a private plane or helicopter, hot air ballooning or hang gliding
  • Jumping activities: kydiving, parachuting, and bungee jumping
  • Motorsports and racing (including boat racing)
  • Motorcycle riding
  • Scuba diving
  • Surfing
  • Luging (riding a board down paved or iced surfaces)
  • Frequent adventure travel
  • Triathlon competition (raises BMI and cholesterol)
  • Mixed martial arts and boxing
  • Free running (jumping, flipping or spinning off objects while you run)
  • White water rafting

Hobbies for which a life insurance company will deny coverage include:

  • Deep sea diving or cave diving
  • Base jumping (diving off cliffs)
  • Skydiving
  • Ice or rock climbing

It’s a lengthy list. But don’t lose heart. There’s more than one way to insure a daredevil.

Life Insurance Policy Plans for Risk Takers

Term life insurance is the least expensive form of life insurance. And some companies that approve a term policy may only charge a flat extra for the first years of your policy. For instance, if you purchase a 30-year term policy you may only have to pay the flat extra for the first five years and enjoy the lower base premium for the remaining 25 years.

While one company may deny coverage for your hobby, another may provide it. It’s all about the variables surrounding probability risk.

Variables include:

  • How often you indulge in your hobby (one annual dive trip is less risky than going out every weekend)
  • The licenses or certifications you have
  • The years of experience you have

Lying Is a Bigger Risk to Life Insurance Coverage than Your Actual Hobby

Having read all this, you may be tempted to lie. But don’t. Life insurance underwriters are intensely thorough. If there’s an accident history recorded anywhere, they will find it. And your hobby will cost more than any premium you pay to cover it.