- A life insurance policy uses many factors to determine premiums. Without knowing how much life insurance you want to buy, your lifestyle, health and length of term you are buying your policy for, it's impossible to know what average price you'll pay. A change from $50,000 to $100,000 in death benefit changes the average price significantly.
- Women, in general, pay less than males for the same policy. This is because life insurance actuarial tables show that women live longer than men, with all other factors remaining equal. Your spouse's $100,000, 10-year term rated for a non-smoker may cost $25 per month. Your policy could cost $20 or even $15 per month for the same policy. This allows you to buy more life insurance for the same price.
- Buying a term life insurance policy has its limits. Life insurance is meant to replace income you bring to your household and provide the financial resources necessary to pay for your outstanding financial obligations at your death. If you have financial obligations extending beyond the term of your policy, these obligations won't be paid for by the policy. This happens primarily when you have to come up with funds to pay for your final expenses. In this case, a low-cost life insurance policy means you don't have life insurance when you die. If you've used up all of your retirement savings, then you leave your beneficiaries with a major financial expense.
- Consider buying a permanent life insurance policy. These policies require you pay a higher premium, but provide coverage for your entire life. The average cost for a permanent policy may be five to 10 times that of a term policy. However, these policies also build a cash surrender value. This cash value is a cash reserve building up against the death benefit which you may use during your lifetime. This cash reserve means you may receive all of your premium payments back that you paid into the policy if you wish to cash in some of your policy before you die.
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