Whole Life Insurance Premiums
Life insurance premiums refer to the life insurance rate payments made by the insured person. Premiums may increase or decrease over time, or in the case of whole life insurance premiums, they remain fixed throughout the life of the policy. The whole life insurance premium is the amount charged by the insurance company for your particular coverage and death benefit, and the amount you will pay as life insurance rates for the rest of your life, as long as the policy is in good standing. Because whole life insurance is a permanent type of life insurance where the death benefit, coverage, and rates can not be changed, it is essential that consumers find the most affordable and best life insurance.
Whole Life Insurance Premiums
With whole life insurance policies, insurance companies determine life insurance rates by age. More specifically, life insurance companies use the age and health of the insured person at the time the policy is purchased, as well as other contributing risk factors like smoking, occupation, family medical history, and the average life expectancy of individuals in the insured person’s assigned risk group, for instance, Caucasian males. If the insured person buys the policy at age 20 and his or her life expectancy is age 75, their whole life insurance rates would be averaged over 55 years.
Term Life Insurance Rates
Term life insurance rates are also based on the age of the insured person over the term of the policy. This is why the cost of a 10 year term life policy is cheaper than the cost of a 30 year term life insurance policy. If a term life policy expires and is renewed or replaced, the life insurance premiums will be much higher than the life insurance rates for the previous policy. Since term life insurance is temporary and expires at the end of the term, policyholders can expect premiums to increase substantially every time the policy is renewed or replaced.
Whole Life Insurance Cash Value
Because whole life insurance can act as an investment too, the whole life insurance rates policyholders pay include an amount which is devoted to the insured person’s cash value or equity in the policy. A percentage of whole life insurance premiums are placed into this savings feature which offers a guaranteed interest rate of return on the funds, one that is higher than a standard savings account at your bank. The whole life insurance cash value can be redeemed, canceling the policy, or the cash value can be used to secure low interest loans from your life insurance company while the policy remains in force.
Term vs. Whole Life Insurance Rates
Because whole life insurance premiums are averaged over a longer period of time than term life premiums, the initial premiums are higher than those of term life insurance policies. However, whole life insurance rates are fixed and never increase while term life insurance rates increase considerably each time a life policy is renewed.
Whole life insurance rates are also higher because whole life policies return some of the premiums to the insured in the form of equity in the policy, as well as guaranteeing the eventual payout of the death benefit since whole life insurance is permanent. On the other hand, term life insurance rates are the cheapest because the insurance company may not have the payout the death benefit at all if the policyholder outlives the expiration of the term life policy.
Studies have show that, when averaged over a life time, the whole life insurance premiums vs. term life insurance premiums are almost the same if a policyholder were to have continuous coverage for his/her entire life. The bottom line is that whole life insurance premiums may cost more upfront, but over a life time, term vs. whole life insurance rates are comparable.
Whole Life Insurance Quotes
Since different types of life insurance use different methods to determine life insurance rates, it can be difficult for consumers to compare life insurance costs and premiums fairly. Whole life insurance also offers investment value while term life insurance simply expires at the end of the term and the insurer retains the premium payments. Most financial advisors have concluded that the difference in cost between term and whole life insurance premiums is negligible over a normal lifespan and whole life insurance offers more advantages than term life.
To find cheap whole life insurance rates, consumers must compare different life insurance companies, policies, and premiums. WholeLifeInsurance123.com works with consumers by providing instant whole life insurance quotes online to help you find the best life insurance available. By entering your zip code, we provide free life insurance quotes from multiple insurance companies on any type of policy and coverage, giving you the chance to complete a life insurance rate comparison and find affordable premiums. Enter your zip code now to begin a life insurance quote and start comparing rates, policies, and carriers.
