Join MoneyMagpie today!
Log in or Register.
Oct 05

How To Calculate The Cost Of Your Life Insurance

Reading Time: 4 mins

Life as you know it has become unpredictable and there’s no telling what will happen in the next few seconds. Whether you like it or not, preparing for the worst is almost the best thing you can do to safeguard your generation’s future. If you have a spouse and kids, you’ll want to ensure that they are well taken care of in your absence. Most people are a bit skeptical when it comes to applying for life insurance policies. There’s a lot of misconception surrounding this subject as it’s usually deemed as ill-fortune. Needless to mention is the fact that most people also think that life insurance policies are expensive. 

While it might seem like a confusing subject, life insurance is one of the best investments a person can have. There are so many benefits a person can gain from life insurance, some of which include financial security, safeguarding your family’s heritage, protecting those you love, and the much-needed peace of mind. To guide you, here’s how to calculate the cost of life insurance. 


Choosing The Right Life Insurance Company

After you’ve decided to invest in life insurance coverage, the first thing you’ll want to do is find a life insurance company that is after your best interests. By this, it means that they’ll have premiums that are affordable and their enrollment processes easy. Sa El, a life and health insurance agent says that quick and simple life insurance quotes should also be a factor to consider when choosing a life insurance company as it will determine the overall costs of the premiums. With a ton of life insurance companies out there, choosing the right one can seem like a painstaking task. Among the factors you’ll consider when choosing the right life insurance company include: 

  • The products and services offered
  • Check the company’s ‘health’ status
  • Ensure to compare quotes from different life insurance companies
  • Ensure that the company has a good reputation and a good track record
  • Choose a company with flexible life insurance packages and competitive rates


Determine How Much Life Insurance You Need

When it comes to calculating the cost of your life insurance, your decision should be based on your long term financial objectivities and goals. Long term, in the sense that, even after you are gone, there will be beneficiaries who’ll appreciate your efforts. In layman’s terms, you cannot put a finger on how much life insurance you’ll need because come to think about it, you might be long gone before you taste the benefits of having life insurance in the first place. Secondly, it all depends on the life insurance policy you choose. Let’s take a look at the different types of life insurance policies that exist today. They include:

  • Whole life insurance policy – As the name suggests, this is a life insurance policy where you’ve locked a specific amount of premiums to go to the life insurance plan. However, a portion of the premiums will be deducted to go towards a cash value that will keep growing as long as the life insurance policy is in effect. 
  • Term-life insurance policy – This is one of the most affordable life insurance options available in the market today. It’s especially a favorite to those who’d prefer to write a will as the benefits of this policy will go to those you choose; whether it’s your spouse, kids, or other beneficiaries of your choosing.
  • Permanent life insurance policy – The best thing about this type of life insurance coverage is that it works in two ways; one is that it provides you with an investment opportunity, and two, it will benefit your beneficiaries after you’ve passed on. 

While there exist other life insurance plans, these are some but of the most common policies that can benefit you in the present time and after your passing. Each of the above life insurance policies will be calculated differently and you’ll need to sit with an experienced life insurance brokerage firm to get your estimates and facts right. 


Consider Your Income


How To Calculate The Cost Of Your Life Insurance

In some ways, your earnings hold reins on the life insurance policy you choose. Come to think about it, those with high paying jobs have access to better life insurance premiums than those on the lower pay scale. However, it all depends on the company you choose and the type of life insurance policy you choose. While this might not be a determining factor when calculating your life insurance policy, various aspects will play a vital if not an important role in your monthly deductions. These include your age, health status, lifestyle options such as whether you smoke or drink, and your gender. It cannot be reiterated enough that you need to consult with a qualified life insurance brokerage firm to know your options. 


Risk Factors

As earlier mentioned, your lifestyle choices will play a significant role in determining your life insurance coverage. For those working in environments where they’ll be exposed to constant hazards, they might be required to pay more. It could also be that you have a terminal ailment when applying for life insurance. One thing to note is that you’ll be required to provide all this information to your life insurance provider. 

You must be thorough and honest as you possibly can when filling out a life insurance application. Failure to this could mean dire repercussions down the line as any misrepresentation could risk your benefits. Such might cost you or your family when hiring attorneys to rectify such errors. Get it right the first time and be done with it!

Now, each insurance company has its ways of calculating life insurance. As is the case with how banks have different interest rates, the same applies to life insurance companies. Choosing a reputable insurance company and one that has been in operations for years could make a huge difference in your final decision. Additionally, you’ll need to do your homework on the best life insurance calculators and how to go about it. The above tips will help to get you in the know zone and help to provide you with insights on how things are done. 

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.


0 0 vote
Article Rating
Notify of
Inline Feedbacks
View all comments

Related Articles

Experian Financial Control

Make Money and Save Money

ideas for everyone
Send this to a friend