Whole Life Insurance Is 6Xs the Cost of Term Life Insurance

Clearsurance.com recently published a life insurance cost review. This comprehensive report analyzes the types of insurance, provides recommendations for consumers, and compares the cost of coverage.

Many types of insurance provide essential protection, and life insurance is one of the foundational policies.

Factors That Affect Life Insurance Premiums

How much a policy will cost depends on several factors, including the following:

  • Age
  • Gender
  • Health
  • Family history
  • Occupation and habits
  • Death benefit
  • Policy term
  • Type of policy

Each of these factors represents a different risk for the policyholder. For example, someone who is 65 faces a statistically higher risk of death than someone who is 25. As a result, the older applicant will pay higher insurance premiums.

Similarly, someone who is a smoker or has been a smoker will face a higher risk of death than someone who has never smoked. So, smokers pay more than nonsmokers, with all other factors the same. 

Types of Life Insurance

There are two general types of life insurance, and both can be broken down into several subcategories. Also, there are several types of life insurance riders that consumers can add to create a policy customized to their needs. 

Term Life Insurance

Term life insurance is the most common and cost-effective type of coverage. It’s the primary way young and middle-aged adults prepare to provide for their loved ones’ needs and lifestyles after the insured’s death. 

Term life insurance costs less than whole life insurance because when the policy’s term — usually 10 to 30 years — expires, the insured receives no benefit from the policy. So, there’s a good chance the policyholder will pay for coverage they’ll never use.

Whole Life Insurance

Whole life insurance is the other broad category of life insurance. A whole life insurance policy doesn’t have a term. If the premiums are paid, the policy will continue until the insured passes away, at which point the beneficiaries can collect the death benefit.

Because there’s a guaranteed benefit as long as premiums are paid, whole life insurance costs as much as six times what term life insurance costs. 

Because of the high costs associated with whole life insurance policies, many financial advisors recommend comparing the cost and benefits of other investments with whole life insurance to choose the best for a person’s unique situation.

The Cost of Life Insurance

Clearsurance.com provides a cost comparison of the average rates for a $250,000, 30-year term life insurance policy for a 35-year-old in each state. The cost of premiums is surprisingly similar in each state.

Consumers in the state with the lowest average costs can expect to pay $49 a month, while those in the highest-cost states should prepare for around $60 a month. 

Life insurance providers classify applicants according to their risk. Those in the preferred plus category will pay the lower rates, while those in the standard risk category can expect to pay the highest rates.

An applicant who falls into the substandard category may struggle to find insurance coverage. Guaranteed issue life insurance may be their only option.

Saving Money on Life Insurance

Shopping around and comparing quotes can help applicants find the best rate available. Of course, there’s more to a provider than their rates, and consumers should also compare providers’ financial stability and customer service reviews.

Life insurance applicants close to the optimal weight and other health indicators can work to improve those factors to qualify under a better risk category and thereby save money. 

Term life insurance is an excellent way to purchase essential yet affordable coverage. Then, a covered individual can decide if it’s right for them to add a supplemental whole life insurance policy.

Read Clearsurance.com’s entire report here: How much does life insurance cost?

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