Best Term Life Insurance

The best term life insurance policy is one that most closely meets the insurance needs of the individual and their family.  These needs change over time according to a person’s sex, age, health, family size and health history, tobacco use, and other factors.  Ultimately, term life insurance policies will be constructed according to the budget of the person considering purchasing insurance.  Understanding and mitigating the costs of insurance premiums will help ensure the best term life insurance.

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What is an Insurance Premium

An insurance premium is an amount of money paid to an insurance carrier in exchange for the guaranteed payment to the policy holder of benefits under certain conditions.  With term life insurance, those conditions are the death of the policy holder.  The premium that the insurance company charges is based upon how likely it is that the insured will die during the term of the policy.  There are many factors that influence this calculation, and some factors may be controlled by and to the advantage of the policy holder. 

Factors That Determine Term Life Insurance Premiums

The primary factor in determining the risk of an insured’s death during a specific period is the age of the policy holder.  Statistically, a 50 year-old male is at far greater risk of death than a 25 year old male.  Therefore, the premium of the older person will be much more expensive.  However, seeking the best term life insurance policy has other, less apparent considerations concerning premiums, such as tobacco use.  For example, a 25 year-old male who smokes will be charged two to three times as much in insurance premiums than a 25 year-old non-smoking male. 

Health is an important factor; but not just the health of the insured.  Term life insurance companies consider the health of the policy holder’s family.  Personal and/or familial history of heart disease, stroke, high blood pressure and/or high cholesterol, cancer, and mental illness will serve to increase the premium of the insured, as all of these diseases and conditions increase the likelihood of the insured’s death during the covered period.

While it seems obvious that term life insurance premiums will be the cheapest for people who are young and in good health, there are other factors to consider.  For instance, the premium for a 25 year-old, healthy male who is a police officer in a large metropolitan area and who skydives on the weekends could be as high as a much older person.  This is because the occupation and personal habits of the insured pose a greater threat of death.  Conversely, the term life premium for a 25 year-old healthy male who works as a librarian and goes fishing on the weekends would be far less expensive. 

Less-known Factors in Term Life Premiums

Today, insurance companies have instant electronic access to a great deal of information about their policy holders.  This includes credit reports and driving records.  Credit reports indicate whether an insured will pay premiums on time, and poor credit history may be a sign of stress that could manifest itself physically and impact the health of the policy holder.  This is considered risk to the term life provider in the same way that a poor driving record indicates a greater chance for death by a motor vehicle accident. 

Reducing the Amount of Term Life Iinsurance Premiums

Some of the factors that determine term life premiums cannot be changed or improved by the insured, such as family health history.  But many of the factors can be changed, and therefore consumers do have some control over the cost of term life premiums.  Being that premiums are calculated based upon two primary categories: Health, and Lifestyle, changes can be made to certain aspects of both that would result in reduced premiums. 

From a health standpoint, quitting smoking or chewing tobacco is a way to substantially reduce the cost of term life premiums.  Lowering blood pressure and cholesterol levels by exercising and eating a healthy diet will also reduce premiums.  Losing weight and maintaining a consistent, healthy weight will result in decreased premiums as well. 

From a lifestyle standpoint, the cessation of dangerous activities will almost always result in lower term life premiums.  This might mean taking up kayaking instead of skydiving, or cycling as opposed to racecar driving.  Daily habits such as maintaining the legal posted speed limits and avoiding dangerous driving conditions such as icy roads or foggy nights can help to improve a driving record, resulting in lower term life insurance premiums.  Likewise, paying creditors on time and maintaining a good credit history is something that can be done on a daily basis that will present a reduced perception of risk to the term life insurance carrier.            

Choosing a Term Life Insurance Provider

Purchasing the best term life policy possible requires a proactive attitude.  Individuals must not only be aware of their own presentation of risk and seek to minimize this wherever possible, but they must also scrutinize the insurance carrier in the same way that the carrier examines the insured.  Understanding the financial strength, claims payment history, length of establishment, and other factors concerning the term life provider will go a long way to ensuring the purchase of the best term life policy for an individual. 

Finally, an individual must be certain that only the coverage that is needed at a particular time is purchased.  Being under-insured can result in loss of income for a person’s family in the event of the insured’s death.  Being over-insured means too much premium is being paid, and an unnecessary amount of benefits will be issued should the covered party die. 

Therefore, when seeking out the best term life insurance, it is important to mitigate the risk represented to the carrier, to examine and investigate the strengths and weaknesses of the carrier, and to have a thorough understanding of precisely what coverage is needed and for how long.  Term life insurance is a useful and beneficial risk mitigation vehicle for anyone of any age when approached in an informed and deliberate manner.       

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