If you’ve been thinking about getting a life insurance policy or reconsidering an existing one, now may be the perfect time to make a move. That’s because life insurance rates are currently at a 20-year low.
There are several factors that go into insurance rates, and several reasons why you’ll want to contact your agent. Let us explain.
Factors that Influence Your Life Insurance Rate
While it may be slightly depressing to consider, it’s simply a fact that life insurance looks at the mortality rates of customers when establishing rates. Often, insurance companies will use mortality tables, which they create using data related to health, age, and other factors, to predict your life expectancy and write a policy. They also consider their own expenses.
In short, your individual rates will be impacted by factors such as:
- Your age
- Your habits and lifestyle (for example, do you smoke or exercise regularly)
- Your family’s medical history
- Your income level
- Your location
- The type of policy you choose
Your insurer will also consider business factors and trends, such as:
- Business expenses: payroll, overhead, etc.
- Premiums and deposits
- Interest-earning ability
- Statistics on life expectancy
The goal is to determine a life insurance rate that is beneficial for both the consumer and the company. Various market forces can make a difference in the policies insurers are able to offer.
Recent Changes Have Lowered Insurance Rates
Effective January 1, 2020, life insurance companies will begin using 2017 mortality rates. The last time mortality rates were updated was in 2001. This change benefits insurers, so they’re able to pass savings on to consumers.
Medical advancements and improvements in the quality of life for many people have also had a positive effect on mortality rates. Because people are living longer, life insurance companies are able to offer lower rates.
Finally, advancements in technology have allowed insurance companies to dramatically improve their mortality predictions. Better algorithms and more accurate data means a better overall plan for you and your family.
Why Now is the Best Time to Take Advantage of Low Rates
They say there’s no time like the present. This is especially true when it comes to life insurance.
Life insurance rates can fluctuate, but they’ll inevitably go up as you age. That’s why it doesn’t make financial sense to wait around for a bigger discount. Locking in a good rate is the smart move, especially if you’re young and healthy. Plus, you can always adjust or replace a policy later if you decide you need to make some changes.
If your needs have changed, or if you purchased insufficient coverage to save money, now is a great time to take another look at your life insurance policy. We can offer a few recommendations:
1. We recommend purchasing an amount of life insurance equal to approximately 10x annual income. Please check out our insurance needs calculator to help you with this calculation.
2. As you plan, look at financial obligations like childcare, college savings, income support, and debt. Also, remember not to cancel a life insurance policy until a new or additional plan is in place.
3. When you are obtaining a life insurance quote, disclose all your health details. The life insurer is going to find out about any adverse conditions during underwriting. If you want your initial quote to be accurate, be candid when disclosing you profile information.
Would you like advice from a life insurance professional? Give us a call or request a quote. We’re happy to assist you in your insurance planning.
