After our baby was born, my partner and I figured it was a good idea to start looking into life insurance. It’s really important to make sure your family is taken care of financially if anything happens to you. We decided to get life insurance and started researching what affects its cost. Here’s what we learned, which might help you too:
1. Choosing the Coverage Amount
Picking the right amount of coverage for your life insurance can be tricky. You’ll need enough to cover funeral costs, pay off any debts like your mortgage or car loans, handle your kids’ college tuition, and possibly provide for living expenses for a while so your family isn’t immediately stressed about money. A $500K policy will generally be cheaper than a $1M policy, but remember, due to inflation, $500K today may not go as far in the future.
2. Length of the Policy
A lot of people go for term life insurance, which can last for 20, 25, or 30 years. With term life insurance, if you’re still alive at the end of the term, there’s no payout. A 30-year policy will cost more than a 20-year one because the longer term increases the chance of the insurance company having to pay out. They counter this by charging you more upfront.
3. Health Status
Healthy people usually have an easier time getting life insurance. If you have a family history of serious illnesses like cancer, you might still get coverage, but it will likely cost more than for someone without that kind of history.
4. Weight
Most insurance companies charge higher premiums for individuals who weigh more. So, if you’ve been thinking about losing some weight, it’s a good idea to do it before applying for life insurance. Check with the company about their weight guidelines. For example, a man who is 6’1″ and weighs over 250 lbs might be considered a higher risk compared to someone who weighs 210 lbs.
5. Age
The best age for a man to get life insurance is in his early 30s. Men in their 20s are often seen as higher risks because they tend to take more risks. By their early 30s, many men have settled down and started families, making them less risky for insurance companies. Older men might be more prone to severe health issues, increasing their insurance costs. If you’re between 25 and 35, check which specific age offers the lowest premiums. You could save a lot over the life of the policy by finding the cheapest year to get covered.
Have you come across any other factors that affect life insurance costs? What tips do you have for finding an affordable and reliable policy?