Low Cost Term Life Insurance Isn’t Always Cheap

You’ve read about how low-cost term life insurance can be and decided that you need to investigate this coverage further. Like so many other tasks in today’s world, you go online to get the ball rolling.

You’ve filled out numerous online applications for term life insurance, but when the quotes arrive, you find that term life insurance isn’t all that cheap. What’s happening?

A couple of factors could be causing higher than anticipated insurance premiums. First and foremost is the general state of your health. Receiving an online quotation is one thing, but only after an insurer has reviewed your medical history will you know your true cost for life insurance.

Very rarely will an individual obtain life insurance without completing a medical examination. Taking out a policy through your employer may be the exception, but generally, the coverage available is minimal in this situation. If you’re looking for life insurance that’ll be of financial value after you’ve passed away, you’ll most likely need to supplement the coverage available through your job.

Does this make sense?

Let’s take a look at the underwriting logic for a moment. If given the choice, life insurance companies would only accept applicants with the best health. Someone in excellent health should live a nice, long life. The longer you live, the less chance the insurance company has of ever paying a death benefit.

In other words, if you outlive your term life insurance policy, the insurance company wins. The insurer has collected your premiums all along but never provided anything in return other than a promise to pay a death benefit if you passed away before the end of the term period.

When determining the premium for a policy, life insurance companies use a classification system. Excellent health individuals are generally classified as “super preferred” and boast the lowest premiums. Several more categories exist; unfortunately, each category lower comes with a progressively higher premium.

Health conditions that raise a red flag in the eyes of an insurance company include tobacco usage, obesity, high cholesterol, high blood pressure, or a family history of cancer, stroke, diabetes, heart disease, or other types of chronic disease, even if you do not show any symptoms of these conditions. Such medical conditions are more likely to cause premature death. And if the insured dies during the policy’s term, the insurance company is on the hook for the policy’s death benefit.