How to Price a Term Life Insurance Policy
Term life insurance provides basic death benefit protection. This type of insurance protects your family in the event of your death by providing an inexpensive death benefit option. When you buy term insurance, you are buying a guaranteed death benefit with premiums that, in most cases, stay level for the term of the policy. Term policies may be purchased for one year up to 30 years. When the term is up, you can usually renew the policy as long as the policy term does not extend beyond your age 85.
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Instructions
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Contact insurance companies. Insurance companies that design and sell term life insurance determine the cost for the policy based on a variety of factors. Some of the cost is determined by the profit targets of the company. Much of the cost is driven by your health. When you are trying to price a policy, you should have a good idea of your own health. Any adverse health condition will negatively affect the premiums you pay for your policy.
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Compare quotes. Get quotes from several companies. When a life insurance company gives you a quote, you can compare this quote to several other quotes to get an idea of what the term policy will cost you. Make sure that you are comparing the same amount of death benefit and all policies have the same features. This will help you determine the price of a policy and the relative costs for your age.
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Reapply for rates. Even if you have to buy a life insurance policy where the premiums are high, this does not necessarily mean that the price of the policy is set in stone. Insurance companies sometimes allow a repricing of your policy if certain conditions are met. For example, if you are a smoker, you may quit smoking and the insurer will reprice your policy. Normally, you must have stopped smoking for at least 12 months before you reapply for insurance.
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