Term Life Insurance Articles
A Look At The Most Expensive Types Of Term Life Insurance
2010-02-06
Term life insurance is the least expensive type of life insurance you can buy. But not all term policies are created equal, and some can get quite expensive. The factors that impact the cost are: the term (length) of the policy, the age of the insured, the health of the insured, and additional benefits, known as riders.
The costs relative to term, age and health are fairly straightforward--the longer the term, the more expensive the premium. You are paying for insurance for a longer period of time, increasing the chances that you will die before the term is up. Most term policies have a level premium, so you pay the same premium for the entire term. The premium is based on your age when you take out the policy. The older you are, the more likely you are to die, and therefore the higher the premium. If you smoke, or if you have a chronic health condition, your premium will be higher than that of a healthy non-smoker of the same age. Your family history can be considered as well, so someone whose parents both died of cancer at a young age will pay a higher premium.
There are additional riders which you can add to your policy, increasing the cost. A disability waiver of premium will pay your premiums should you become disabled. You may be able to get a rider to cover your spouse and/or children on your policy. Some policies include a return of premium rider, which refunds the premiums if you are still alive at the end of the term. Many people find this rider appealing, because they don't like the idea of paying premiums and having nothing to show for it at the end of the term. A return of premium rider can be very expensive, and the amount you get back is the premium only... it does not include the cost of the rider. If you take out a 20-year term policy with a base premium of $1000 per year, plus $500 per year for the rider, you will get back $20,000 ($100 per year for 20 years), but you will have paid $30,000 including the cost of the rider. If you cancel a return of premium policy before the end of the term, you will get back a very small percentage of the premiums you have paid.
When you are applying for a policy, make sure the term life insurance quotes you are getting are comparable, and make sure you understand all the features and riders. That way, you can be sure you are getting the right policy for your needs.
