Here’s a brief guide to understanding a term life insurance quote. For our purposes, here’s the quote: “$500k of 20-year level term life for a 35 year old male would be $23/month (best rating; $31 second-best).” This is an actual quote I ran this morning. Let’s break it down piece by piece:
* $500k. This is pretty easy. With this policy, if you die, your beneficiary would receive $500,000. This obviously would help your family make ends meet for a while, maybe pay off the mortgage, that sort of thing. That’s why this kind of coverage is so important for anyone who is a “breadwinner” for his/her home.
* “20-year Level term life.” This policy takes the premium for each of the next 20 years and averages it out so that your premium is the same (“level”) for the duration of the policy. After 20 years, you may have an option to keep the policy in force but the price would go way up because, well, you’re 20 years older. You may also have the ability to convert this policy to a “permanent” policy (such as “whole life” or “universal life,” which don’t expire, accumulate cash value, but are MUCH more expensive).
* “Best rating”… “Second-best…”. When you apply for coverage your application goes through an underwriting process where you are put into a rating category based on the level of risk the insurance company believes is present in light of your current and past health, the presence of risk factors, even your family history. Most of the time, for obvious reasons, companies quote prospective clients at the “best available” rating.
If you’d like to see a personalized quote for term life insurance, contact AC Forrest. It takes 60 seconds to get a preliminary quote.