So how much should you pay for life insurance? This is a very good question because there are individuals out there paying too much and some who are actually not paying enough because they don’t have enough coverage. Fortunately, there is a happy medium here, but it is important that you know what it is.
Paying too much?
How does someone pay too much for life insurance? Well, there are two ways in which this is done. The first is that they have taken too much coverage. The higher the coverage, the higher the premium.
Another reason why individuals pay too much for life insurance is that they have not compared their prices with other companies and they have simply picked an expensive company.
The types of coverage
There are a number of factors that go into what you pay for life insurance. The first is the type of life insurance you buy. You have three types: Term, Whole, and Universal. Term is the simplest and the cheapest. It is not unusual to have a 20 year term policy in excess of $300,000 of coverage for $20 or $30 per month. The reason why it is so cheap is because it is very unusual that an insurance company has to pay out on a term. They are most likely going to pay out on a Whole or Universal.
A Whole life policy is going to be more expensive. As a matter of fact, the monthly premium could be more than double a Term policy for the same amount of coverage. This is because this policy is special. There is an annual dividend that enables this policy to gain cash value. It is also a guaranteed policy that will last for the remainder of your life.
A Universal life policy is a mixture of both Term and Whole and also packs a higher price tag. This is because it is a more flexible policy that allows for changes at any time. You can increase your amount if you need to. This is great when you can only afford a certain premium in the beginning, but can afford more in the future.
Another factor is your overall health when you open the policy. If you’re overweight or have a health condition, your rate may rise.
Paying the right amount
To determine what the right amount is, you have to comparison shop. This means that you will need to check with multiple companies. You will have to acquire quotes and compare those quotes. And if the policy specs are not available immediately, ask for coverage outlines from each company so that you can compare the features and the cost associated with those features. If one policy is $68 and has the same exact features as one that is $99 per month, then you know the $68 is going to be more affordable. If you find another policy with similar features for $50 per month, but the $68 has all of the features you need, you know you should be paying $68 per month.
It all comes down to being patient. That way if you’re supposed to pay $30 per month, you will find that $30 per month policy.