Life insurance is something that every person with dependents should have in case they are taken from their family member prematurely. Even people without dependents that want their funeral paid for when they pass on should have this type of insurance.
There are many different types of life insurance and no one policy is exactly like the other. In fact, many life insurance policies are finalized after much debate by the insured and the insurance company in order to create a customized policy that works for everyone. The costs that are associated with each policy depends on several factors.
The very first of these factors that must be determined is the insured party’s age. Obviously, if one party is much older than another, the older party will have to pay higher premiums in order to acquire the same amount of coverage in the end. This is so the insurance company covers more of its cost. For example, John is 63 years old and Mary is 44 years old. If both parties decided to get $100,000 of coverage, then John can expect to pay much more in premiums than Mary. In fact, because he is about twenty years older than Mary, John might have to pay as much as twice the amount that is required for Mary in order to get the same amount of coverage when he dies. For both parties, some of these life insurance premium payments may be tax deductible, so just because more is paid for the premium doesn’t mean that all of your money will be taken by these payments.
Another important factor that decides how much will be paid each month in premiums for policy holders is the health of the policy holder. Health can be very hard to determine just by looking at a prospective policy holder, so many life insurance companies require people looking to be insured to go to a doctor’s office and get a physical. They also require medical records from the policy holder’s life in order to see if there are any other risks that are being overlooked. The insurance company may also even look at the policy holder’s parent’s records to see what types of genetic diseases have been passed down.
Several low rate policies have been springing up due to the high costs of insurance that allow policy holders to get life insurance without getting a checkup. Some offer life insurance to people without preexisting conditions, which are maladies that the policy holder had before they acquired the life insurance policy. A person with preexisting conditions used to be nearly impossible to insure, but now it is getting easier in order for insurance companies to attract more policy holders.
In general, the healthier a person is the more likely they will be able to pay a lower rate on their insurance. For example, if Bob has lung cancer and is 56 years old, and Debra is also 56 but is healthy, Bob will incur more cost when it comes to paying his life insurance premiums. Keeping healthy is important.
It is also no surprise that the size of the benefit paid out to the beneficiary when the policy holder dies is another important factor in deciding how much is to be paid for the policy. The benefit is the amount of money that is paid out on the death of the policy holder in the case of life insurance. This amount is usually in the hundreds of thousands of dollars range and is predetermined when getting a policy set up. The total amount invested in the policy, which is the amount that is actually paid by the policy holder to the insurance company, has no bearing on how much is paid out. For example, if Judith made payments that amounted to $2500 per year on a $500,000 policy, but died only after three years of making payments, then her beneficiary would still receive the full $500,000.
In general, the larger the amount that is paid out at the end of the policy, the more that will have to be paid in during each premium period, or every month. For example, if Irene, age 50 wanted to take out a life insurance policy of $100,000 and Jacob, also age 50, wanted to take out a life insurance policy of $250,000, then Jacob would be required to make larger payments if both people have the same health.
The fact is, life insurance is something that is necessary if you want to make sure that your loved ones are taken care of if you die unexpectedly. The cost of life insurance depends on a person’s age, their health, and the amount to be paid in the end, so almost every life insurance policy is different. Life insurance policies can always be cancelled for a certain cash value if they are no longer needed. It is better to be covered.