Top Reasons Why Term Life Insurance Prices Vary Between One Another

By Author: J.J. Yong
Total Articles: 963
Comment this article

With so many different Insurance companies in the market today, Term Life Insurance prices can vary considerably between different Insurance companies. The differences may be due to the differences in the operational efficiency, the liquidity position, financial stability and strategy planning of the Insurance company itself.

Even within the same Insurance company, the prices of term life insurance can be different because of their different types and characteristics, the risk level and duration of the policies themselves.

Let's review some of the top criteria causing prices to be different for term life insurance policies today.

1. Duration : The longer the period for which the Life insurance policy is required for, the higher cost shall be. A 30 years term policy will definitely cost more than a 20 years term policy. The increase in cost for a longer term is because the insurance company needs to hold on to the policy for the specific terms that it is entitled for.

- For every insurance policy, it is a betting game. The insurance company is betting that you will not die within the policy period. ...
... If you die before the policy expired, death benefits will be paid, whereas if you survive through the duration, you will get nothing.

- The longer the term of this policy, the higher possibility one will die before the policy expired and the higher risk the insurance company is in.

There are different types of term life Insurance :

2) Yearly renewable and decreasing term policy,

- This yearly renewable term life insurance can be taken as a one-year term policy which can be renewed annually based on your needs. However the price of the premium will increase each year when the annual renewal is made. The insurance company charged a higher premium price in later years because of the common perspective, " as one gets older, the higher risk he has for death".

3) Decreasing term policy

- The premium on this type of life insurance is fairly inexpensive, but the death benefits payout is reduced uniformly over the years. At the beginning, your young age offset the cost of the huge risk assumed by the insurance company, while the negligible risk in the final years cost more because of your older age.

- These are how the different types of term life insurance works with their characteristics which have significantly call out for the different price for each of the policy.

4. Last but not least, prices of the term Life insurance can differ significantly between different companies due to,

- Different underwriting process and evaluation criteria used

- Different in terms of financial stability across different companies

- Different insurance coverage offered for their targeted customers

- Some insurance companies offer relatively low insurance rates to get their Business especially for new insurance companies.
For more information about life insurance rates and life insurance companies, visit LifeInsuranceEssentials.com.