How to Determine the Cost of Life Insurance
- 1). Determine the type of policy you want. There are two types of life insurance policies you can purchase. Term life insurance is the most basic form of life insurance on the market. With term insurance, you pay for a death benefit for a set number of years. Permanent life insurance is where you pay for a lifetime death benefit and receive that benefit plus a cash reserve, called a cash value, that is associated with the policy. This cash reserve is used by you for any purpose you want throughout your life.
- 2). Get an application for life insurance. Life insurance companies use pricing schemes that depend entirely on your age and health. But each company also designs and sells policies that offer different features and benefits. The features and benefits of the policy affect the cost of the premium as well. The only way you can determine the cost of insurance is by getting an application from multiple life insurance companies.
- 3). Compare the policy offers you receive. By comparing policy offers, you can get an idea as to how much you will pay for life insurance. You may be surprised to find that premiums vary by a wide margin depending on whom you apply to. Some life insurance companies also tailor their product line so that policies are priced lower for certain age groups. This means that individuals younger or older than the company's target age group subsidize the "ideal" age group for that company's policy.
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