life insurance premiums

How Your Life Insurance Premium is Calculated

A life insurance premium paid to an insurance company is a periodic payment made for the insured’s life insurance. The premium itself can also increase the value of an existing permanent kind of life insurance, known as a casket policy. This term is used to refer to payments paid for annuities both variable and fixed. Variable life insurance premiums are based on economic factors such as current and historical rates of interest, risk-free investments, and other financial variables. Fixed life insurance premiums are guaranteed at the time of purchase and do not fluctuate during the life of the policy.

Variable life insurance premiums and rates are sometimes called “risk-free” premiums and for this reason may seem less expensive. In general, however, these types of policies have much higher rates of interest than traditional life insurance premiums. Some insurers may offer them at a discount. It is also common for life insurance companies to vary in their qualification criteria. Different premiums may be required based on age, gender, or the health of the insured.

Mass Mutual and Union Mutual are two of the most common types of life insurance premiums offered. Both provide extensive coverage for the same age group. For example, on a twenty-year-old person a fifteen percent upfront premium would be equivalent to a total face value of one hundred thousand dollars. On a fifty-year-old person the same fifteen percent would be worth a little less than two hundred thousand dollars.

If you plan to collect on your policy then you will probably want to find a company that pays off the premiums over a period of time. If you need cash up front before the premiums can be collected then a term policy lapse may be the better choice for you. A mass mutual or union mutual policy will allow you to make regular monthly payments as long as they fall within the life insurance premiums budget. These types of policies have a much lower premium than those offering whole life insurance premiums.

Some life insurance policies also offer a death benefit. This can take the form of an immediate lump sum payment should the insured die within the specified time period. Most policies offer this type of coverage and it is usually worthwhile to purchase additional coverage for additional death benefits. You may also want to increase the actual amount of coverage by choosing higher premiums.

Another factor that can impact your premiums is your health rating. If you are healthy and fit, your premiums will normally be more. Conversely, a person with a poor health rating and obesity is more likely to choose to pay out more for the same coverage risk. Health ratings will fluctuate from A to D. Health ratings are often affected by cholesterol, smoking, and past illness. If you have certain pre-existing conditions, you may choose to exclude from coverage. It is important to read your policy documents carefully and understand the definition of a “pre-existing condition.”

Policy features that have the greatest impact on insurance premiums are premiums, age, sex, and family status. Each one has its own different effect on premiums. If you smoke, the cost of your premiums will go up. Likewise, people who are overweight are more likely to pay higher rates. Different types of policies offer different types of discounts.

People who are considered high risk are charged more for their policies. Examples of these policies include unmarried parents, smokers, and those who have a history of bankruptcy. High risk individuals can usually obtain discounts based on their credit rating, social security number, or income level. In some cases, insurance companies offer to provide a higher premium due to your good health status if you maintain a high premium due to your risk factors.