Term Life Insurance Prices Are Low Because Such Policies Have No Cash Value

Do not buy term life insurance if you are looking for some reliable saving option or pension plans. Term life does not provide them. This is a pure insurance plan and it will provide the following benefits if the insured person dies within the stipulated term:
o funeral cost of the deceased
o dependence care
o dependence's collage education
o mortgage coverage
o coverage for consumer loans


In term life insurance plan the death benefit is in the form of a lump sum amount that the beneficiaries get in the event of death of the insured person within the term of the policy. The term is the most important factor in determining the term life insurance rates and has to be decided very carefully. This is because if the insured person dies even one day after the expiry of the term of the policy then the beneficiaries do not get the death benefits. Still some people prefer to buy term life insurance policies because of the affordable rate that it offers.

It is said that term life insurance rates are cheaper in comparison to the whole life or universal life insurance rates. Why do the carriers provide the coverage at such low rates? How can they afford to do so? The answer lies in the very fact that death benefits are paid only if the insured dies within the term and that it has no cash value.

There are a few conditions though that you need to qualify in order to avail the term life insurance. These factors are also known as carriers which ensure that you are insurable. The factors that are taken into account are:
o Age- the rate of the term life insurance increases with age, i.e. the younger you are your insurance policy is going to be cheaper.
o Gender- the rate of term life insurance is lower for women than in case of men as women are considered to live longer.
o Tobacco use-non- smokers have to pay lower term insurance rates.
o Health Class- as the condition of your health has a direct bearing on your life span hence the healthier you are the less likely you are to die resulting in the lower term insurance rates.


Infact we cannot categorically say that rates of term life insurance are always low but it depends upon a number of factors. If you pass all the health tests and convince the carriers that you are going to outlive the term of the policy then they will offer you very low rates. Similarly they can charge you higher rates also if you do not qualify as per their terms and conditions.

The term life insurance policies does not have any cash value and hence the underwriting cost is also very little. This also adds up to the low term life insurance prices. Another point that determines the cost of the term life insurance policy is the body mass ratio. So, the term life insurance policies are going to be costlier for obese people than people having normal body weight.

The term of the policy should be fixed after proper evaluation of your liabilities so that you can get the money at the correct time when you need it the most. Say for example that you are buying the policy to cover your mortgage or your children's education then you should choose the term which will cover the time required for the completion of your child's education and the repayment of the mortgage. Some of the factors that might help you to calculate the term of your policy are age of your children, your retirement age, by what year you will be able to grow a decent bank balance, years of mortgage left etc.

The coverage amount too has an impact on the term life insurance prices. Higher it is, higher is the premium rate. Therefore, it should be neither too low, nor too high. It is hard to calculate the amount of money your family will need in your absence in an unspecified future. Multiplying your annual income before tax by fifteen is one of the ways. Alternately, you can contact some good broker who can calculate the amount taking into account factors like inflation and interest rates.

Buying term life insurance before you are forty is most profitable than when you are in your fifties. The more your age is the costlier your insurance policy will become. But if you are still planning to buy insurance policies then it is better to buy graded life insurance or you can also buy term life insurance on a yearly basis.

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The cost of the term life insurance policies increases with age and at sixty the cost becomes so high that it becomes exorbitant. Getting the life insurance at an early age is always the best option.

Delnaz Thompson owns an insurance business that deals primarily in life insurance. If you would like to get the most competitive term life insurance or to find out about the term life insurance, visit her site today.

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