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Permanent Life Insurance Cost

How Much Does Permanent Life Insurance Cost?

The cost of permanent life insurance will vary depending upon your personal profile and the life insurance company you buy a policy from. Each life insurance company has its own complex methodology for calculating premium costs. You’ll term life insurance is consistently less expensive to buy than a permanent life policy. Permanent life insurance policies have a cash value accumulation feature, but term insurance provides death benefits only.

To make an informed decision on the right policy for you, find a local independent agent in the Trusted Choice® network who specializes in life insurance. Your local member agent can help you compare permanent life insurance costs and find the right policy to meet your needs.


2012 Life Expectancy Rates: How the U.S. Compares

The United States ranks among the top 50 countries worldwide for life expectancy. As you’re thinking about your life insurance policies, here are a few facts to consider:

  • No. 1 Life Expectancy Ranked Nation – Japan – 83 Years
  • No. 2 Life Expectancy Ranked Nation – Switzerland – 82 Years
  • No. 34 Life Expectancy Ranked Nation – United States – 78 Years

There are many ways to plan for your future, no matter your age or how long you live. Life insurance policies are one important way to protect your loved ones and your finances when you have passed. For more information on life insurance, contact a local independent agent.


How Are Permanent Life Insurance Rates Calculated?

There are a variety of factors that every life insurance company uses to determine the premium. There are three basic types of permanent life insurance policies:

  1. Whole life
  2. Universal life
  3. Variable life

All three of these types of plans have variations and their costs are calculated differently. While all permanent life insurance policies provide death benefits, what differentiates them is how the premiums can be paid and how you can use the cash value accumulation.

Every life insurance company uses “actuarial analysis of mortality statistics” to gage the amount of risk they are taking to insure a customer. This analysis gives the life insurance company a good idea of your life expectancy, and includes a number of variables that a company will use to determine the premium you will pay.

One important point to remember is that the younger you are when you buy a life insurance policy, the cheaper your premium will be. Regardless of the policy, life insurance becomes progressively more expensive as you age.

The main variables used to determine how much your permanent life insurance policy will cost include:

  • Your age: The younger you buy life insurance, the more affordable it will be. Your chances of dying or developing life threatening health risks increases as you age.
  • Your gender: Life insurance tends to be somewhat cheaper for females and more expensive for males.
  • The state of your health: The healthier you are, the lower your risks are and the more affordable your policy will be.
  • Whether you smoke: Smokers pay considerably more for life insurance. You can reduce your rates if you quit smoking, although you will likely have to have quit for at least a year or more.
  • Your lifestyle: If you live a healthy lifestyle, your life insurance rates should be cheaper.
  • Your family medical history: If your family has a history of heart disease or cancer, you may pay a higher premium.
  • Your occupation and hobbies: Some hobbies and jobs are considered risky to insure. If you work as a commercial deep sea diver, for example, or you drive race cars for fun on the weekends, your rates will almost certainly be higher.
  • Size of the policy: The amount of death benefits you choose will directly impact the premium you pay.
  • Your medical exam results: If your medical examination shows that your blood pressure and other vitals are in a normal, healthy range, your rates will be lower.

Note that some life insurance policies are available without a medical exam. However, the premium you pay for a policy that requires you to take a medical exam will be cheaper than for a policy that does not require a medical exam. A medical exam allows the insurance company to know exactly the health status (and risk) of every customer they insure – without that data, the risks are unknown, and premiums tend to be higher as a result.


How Do Life Insurance Companies Use Premiums?

Different types of permanent life insurance vary in how the insurance company uses your premiums. In some policies, such as universal life and variable life, you have some options to alter the amounts, but essentially your premium gets used to pay for three major components of the policy:

  • The amount targeted to pay your death benefits
  • The amount you pay to cover the cost of administering your policy
  • The cash value accumulation or saving/investment component

To review how a type of permanent life insurance manages these different components, meet with an independent agent in the Trusted Choice network. Talking with an independent agent will get you one step closer to choosing the policy that best fits your situation. Your agent can evaluate your life insurance and investment needs and help choose the right policy for you.


How Much Does Whole Life Insurance Cost?

With whole life insurance, the higher the premium you pay, the higher your cash value accumulation. This type of permanent life insurance is not difficult to understand. Once you decide on the amount of death benefits you want, the premium you pay is guaranteed for the life of the policy. The minimal amount of return that you will receive on your cash value accumulation is also guaranteed.

The types of whole life insurance policies you can choose from include:

  • Non-participating policies: You’ll have no say in how the insurance company allocates your premium
  • Participating policies: You’ll have a say about how the company uses the dividend
  • Combination policy: A permanent policy used in conjunction with a term policy
  • Joint policy: You and your spouse buy a whole life policy jointly as opposed to separately

Non-Participating, combination and joint policies tend to be cheaper than participating policies.

Let’s take a look at a few quote examples. The following figures will provide a rough idea of what you might expect to pay for a whole life policy with death benefits valued at $250,000. The assumption for each of these examples is that the policyholder is a non-smoker, in good health, who lives in Nebraska.

Monthly and Annual Whole Life Insurance Rates

Monthly and Annual Whole Life Insurance Rates

How Much Does Universal Life Insurance Cost?

Universal life insurance has added flexibility that you don’t find in a whole life policy. With universal life insurance, you have choices with what to do with your accumulated cash value in the event that you run into financial challenges. For example, you can use the cash value to pay your premium. You can also increase or decrease your premiums or death benefits. These choices will have a bearing on your cash value accumulation portion of the policy.

Let’s look at a few sample quotes using a similar scenario as above. This example will give you a rough estimate of what you might pay for a $250,000 policy if you are a non-smoker and in good health.

Monthly and Annual Universal Life Insurance Rates

Monthly and Annual Universal Life Insurance Rates

How Much Does Variable Life Insurance Cost?

A variable life insurance policy is similar to a mutual fund. The cash value accumulation has a more distinct investment component than other types of permanent life insurance because it allows you to choose from a variety of investment options. There are many variations on variable life insurance, and your costs will vary widely depending upon the type you choose.

Variable insurance is different from whole life and universal life because the company is obligated to provide you with a prospectus that breaks down all the costs for your policy, including the fees and the expenses for the “sub-account,” which is the portion allocated for investment.

To learn more about variable insurance, find an independent agent in the Trusted Choice network who specializes in life insurance. One of these agents, right in your area, can provide a complete review of variable permanent life insurance costs for you.


What Happens If You Miss a Life Insurance Payment?

What happens if you miss a life insurance payment depends on the type of permanent life insurance policy you are buying. With a whole life policy, it is quite simple – if you miss a payment, your policy lapses.

With a universal life insurance policy on the other hand, the company will take the premium from the cash value accumulation portion and continue to pay the premium. A variable life insurance may or may not offer similar options.

How much permanent life insurance costs can vary considerably from company to company. To find the best quotes and get the help you need to choose a policy that meets your life insurance needs, find an independent agent in the Trusted Choice network. These agents have access to several different life insurance companies and can provide the information you need to make an informed decision. Contact an agent today to get started.

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