How to Find Low Cost Term Insurance

Low cost term insurance is a great way to reduce the cost of life insurance. Finding the lowest term rates depends on the three primary factors that affect the cost of insurance: The length of the term, the amount of the death benefit and the risk factors of the insured. A low cost term insurance policy can be written that takes all of these factors into consideration.

Selecting the best term length and death benefit will vary for each individual. For example, a 45-year-old woman with a husband and a 15-year-old daughter might consider a 10-year term policy. The 10-year term might be in force long enough to cover her daughter’s college tuition costs, make mortgage payments, and otherwise provide for her family in the event of her death.

Also, the health risk factors of the insured, ranging from work hazards to lifestyle choices, will play a role in determining the amount of a low cost term insurance policy. Life insurance companies calculate these factors in combination with the length of term desired to determine the monthly premium, or the lowest possible cost of the policy.

» Get Top Term Insurance Quotes Now

What Factors Affect Low Cost Term Insurance?

Life insurance companies use three main factors to determine the amount of the monthly premium of a low cost term life insurance policy:

  • The term length
  • The amount of the death benefit
  • The risk factors

Term life insurance policies are sold to an individual for a specific amount of time. This is known as the term. If the insured dies before the term is over, the insurer pays the beneficiary or beneficiaries the death benefit. If the insured is alive at the end of the term, he or she is usually given the option to renew or convert the policy. The options depend on his or her age and health at the time of renewal. Term life insurance policies are commonly issued in five-year terms for as long as 30 years. For most policies, a longer term results in a higher premium.

There are two types of low cost term life insurance from which to choose:

  • Term life that has an annual renewable term and term life that has a level term
  • Low cost term life with a level term is the more common policy

Term Insurance with an Annual Renewable Term

As is implied in the name of the term, when choosing low cost term insurance with an annual renewable term, an applicant is choosing a term length of one year. The premium paid to the insurance company covers just the cost of insuring that person for one year at the age he or she is at the time the term policy is written. If the policyholder renews the policy at the end of the term, the premium will increase because he or she is one year older than the previous term. As the policyholder gets older, the risk to the insurance company of paying a claim rises. While low cost term insurance with an annual renewable term can be easy and inexpensive if needed for a limited amount of time, it can be a costly way to purchase term insurance as time goes on.

Term Insurance with a Level Term

Those who buy low cost term insurance with a level term can rely on the amount of the premium remaining the level as long as the policy is in force. The premium for low cost term insurance with a level term is determined by the age of the policyholder at the beginning of the term and the length of the term selected. The premium paid the first year of a level term policy might be more than the one-year premium of an annual renewable term policy, but the premium in later years will be less.

The value of a low cost term life insurance policy is the amount the insurer will pay the beneficiary upon the death of the policyholder. The death benefit can range from $5,000 to $2,000,000. A policy with a higher death benefit is more expensive than one with a lower benefit.

Life insurance company underwriters use risk factors of the insured such as age at time of issue, health status, family medical history, occupational risks and lifestyle choices. These risk factors help the underwriters to evaluate the statistical probability of paying the death benefit.  Medical issues such as obesity, high blood pressure, diabetes, hazardous occupations such as long-haul trucking and lifestyle choices like smoking will usually result in a higher monthly premium, even for low cost term insurance.

While the policyholder cannot control his or her family history, he or she can reduce the monthly premium by reducing risk factors. Having a complete physical before applying for the low cost term policy will give the insurance company the most recent health information, like height, weight, blood pressure and cholesterol levels.

In order to reduce risk factors, applicants should consider the following:

  • Quit smoking - Premiums for low cost term insurance policies are usually lowered when an insured is tobacco-free for 12-36 months
  • Reduce alcohol intake
  • Lose weight

Who Will Qualify for Low Cost Term Insurance?

Those who buy low cost term life insurance are most often young people looking to protect their families for a defined period of time. The low cost premiums for this market are lower compared to other insurance policies, as the risk to the insurance company is lower. Healthier individuals who do not smoke are can always find a low cost term insurance policy.

Many people buy term insurance because it is affordable. For this reason, low cost term insurance is also purchased as supplemental insurance. For example, a 42-year-old mother of three young children may buy a separate low cost term insurance policy to make sure that her children and spouse will not suffer a reduction in their standard of living. A young couple may buy low cost term insurance so that the surviving spouse will be able to make mortgage payments or pay off other debts.

To find the best life insurance products request a free, comprehensive quote comparision. Secure your future today, Get Started Now.