More people are recognizing the fact that in order to make sure their family is taken care of, in the event of their demise, they need to have life insurance to pay the bills and take care of costs associated with their death. Realistically, the younger a person is when they get their first life insurance quote, the less expensive it is likely to be, but there is more to calculate the cost than the age of the insured.
There are several factors involved when an insurance company puts together a life insurance quote and the age of the insured is only one of them. Others include the insured’s overall general health and possibly their family health history.
Understand that when a company issues a life insurance quote they are gambling that the insured will live long enough for the premiums they pay to cover the cost of the insurance pay out and all associated administrative costs incurred during the life of the policy.
The type of policy being issued will also play a role in the life insurance quote and in most instances, a term life policy will cost less than a whole life plan. Term life generally states that a specific amount of money will be paid upon the insured’s death and the policy is written to remain in force for a specified period of time.
Not All Policies Are Created Equal
From a legal standpoint, an insurance policy is a legal contract requiring both parties of the contract to meet certain defined obligations. Typically, if the insured makes all of the premium payments according to the life insurance quote, the insurance company will pay out the amount specified in the quote. However, there may be certain contingencies established within the contract that will allow the company to make a life insurance settlement of a lesser amount than written into the life insurance quote.
Another factor that can affect the life insurance quote is the payout provision within the contract. For example, a decreasing policy, often referred to as mortgage insurance, will cost the same over the life of the policy.
However, as the balance due on the mortgage diminishes so will the amount paid out in event of the insured’s death. If the insured takes on additional financial obligations with the home’s deed as collateral, the cost of the insurance may increase above that offered in the original life insurance quote.