Although term life insurance policies are often simpler than permanent life insurance, there are a few factors buyers should be aware of before shopping for rates. Let’s take a closer look at four things to know about term life insurance so that potential policyholders can shop around and compare term life policies with confidence.
1. Several factors influence policy costs.
The cost of a term life policy is affected by several factors, including:
- Age: Premiums are higher for older policyholders than for younger policyholders.
- Health: If you have health problems or a family history of health problems, you may pay a higher premium.
- Job: Some occupations, such as airline pilots and firefighters, are considered dangerous. If you work in one of these high-risk jobs, you may have to pay a higher premium.
- Hobbies: Some activities, such as motor racing and skydiving, are high-risk. Premiums may be higher if a policyholder engages in any of these activities.
- Smokers pay a higher premium.
- Premiums are a bit higher for men than for women due to life expectancy differences.
Also, some insurers charge different prices than others for the same amount of coverage.
2. Policyholders can add riders.
Riders are optional coverage or perks that policyholders can add to their term life insurance policy for a fee.
3. The policyholder may be required to undergo a medical examination.
Most term life insurance policies demand that policyholders fill out a medical questionnaire and undergo a physical examination. This is usually taken after the policyholder has applied for it. Following the submission of an application, the insurer will send instructions on how to schedule a medical exam.
4. There are a variety of term lengths available.
The term lengths for term life insurance are typically 10 to 30 years. This makes it easier to receive the proper level of coverage while staying on budget. For example, suppose a policyholder has a new child and wishes to supplement their current policy until the child is an independent adult. In that case, they could purchase a 20- or 25-year policy to provide more coverage at a lower cost. The policyholder will no longer worry about paying the higher payment when the youngster grows up, and the insurance ends.
Term life insurance policies can provide sound financial protection, but policyholders must understand how they work to obtain the coverage they require without overpaying.
There are several types and term lengths to choose from, and you can add riders for additional benefits.
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