Why is life insurance premium is increasing?

Why is life insurance premium is increasing?

If your term life insurance premium is increasing, that usually means that you have had your policy for at least 5 years (5 year term), but most likely 10 year term or perhaps even 20 year term.

It is quite normal for insurance companies to increase premiums after the term is up, this is called a renewal, but… most insurers increase the premium a whole lot, and it just becomes ridiculously expensive!

If you scroll down, I included an explanation of why your premiums are increasing, but first, let me offer up a solution to your increasing insurance  premiums.

Good news though, you don’t need to pay these high prices! The best thing to do is re-shop it and this way you will get the best market price at this time.

You can use our handy “Best Rate Calculator on the right to do just that, and get instant online quotes.


Start by entering….

 

  • Your date of birth – this is important as life insurance premium is calculated by your age
  • Sex – Male or Female
  • Smoker – Have you used any form of tobacco products in the last 12 month (up to a maximum of 12 large cigars per year are allowed)? For more detailed info on smoking and life insurance, click here. This is especially important if you smoke occasionally, or if you smoke things other than cigarettes (cigars, cigarillos, chewing tobacco, or even if you are on smoking cessation stuff like the patch, champix nicorette gum etc).
  • Pick your health class – there is 3 categories, and this is only an estimate and the final outcome will be determined by the insurance company. For “Excellent” you take no prescribed medication, and are generally in above average health & your labs are better than average. Your weight is under 200 pounds for males and below 170 pounds for females. For “Average” category, (this will be the majority of people), you are average height and weight, your labs are average, you may be on some basic meds for maintenance such as pills to control blood pressure or cholesterol etc. Please try to be realistic when choosing a category, we get the majority of visitors chose preferred plus (excellent), but only 25% of applicants qualify, so it shows you that most people are not realistic about what they think their health is like! Finally, it will be the underwriter at the insurance company that decides what level of health you will qualify for , so it doesn’t matter which one you pick here. Some people prefer to be pleasantly surprised by a better rate than they thought, so it is always safe to assume average rates, and if you do get the preferred, look at it as a bonus. One more thing about health …. you my have some medical conditions which may be rated as a higher risk than even the average rate, things like diabetes, heart or circulatory issues, history of cancer etc. If that’s the case, I would recommend that you call us, because we will have to find you special rates and companies to get you insurance.
  • Duration – this is where you pick the length of term you want. The shorter the term, the less expensive the policy is. The best value is with the 10 & 20 year terms, and that is what most people really need. You could look at some of the longer terms, but keep in mind that they are more expensive. If you are not sure what you need, we suggest for you to call us and speak to an experienced agent that could give you more advice. Call 1-800-683-5423
  • Face Amount – this is where you pick the amount of insurance that you want to be covered for. Here is a tip… most people don’t pick enough, because they under-estimate what their family will need if they should pass away. One big mistake I see people make is, they pick “too long of a term” and because the longer terms cost more, they are forced to reduce the amount of coverage in order to be able to afford the premiums. That mistake could cost your loved ones hundreds of thousands of dollars. It would be better to pick a shorter term and get a higher face amount of insurance. Again, to get advice, call us.

The reason for the life insurance premium increase?

Your life insurance premium is increasing because you are getting older. The way it works with life insurance companies is that once your term is up, your policy will automatically renew at a pre-determined price, which your insurance company has already printed in your policy as a schedule.

Most people don’t bother reading the policy anyway, but if you ever have a chance, take the time and look at it, and it will be scary at first, because chances are that your renewal looks something life this :

Schedule of premium changes:

Provided there are no changes with your insurance coverage the following total annual premium will apply>

Renewal period                                                                      Renewal premium
Aug 15, 2016 – Aug 14, 2026                                                         $2,327.50
Aug 15, 2026 – Aug 15, 2036                                                      $20,424.00

So as you can see, this is almost a 10X increase, which will be cost – prohibitive for most people.

So what is your alternative to higher life insurance premium increases?

Pretty simple actually, your best bet is to engage a good life insurance broker, and let them shop the current life insurance premiums market and find you the best current price.

Make no mistake, your premium will still go up, but not nearly by as much.

You see, if you are still in decent health, you can qualify for a new policy, but you will need to re-apply again, and there may be a medical required, depending on your situation.

To find out more on how you can get a better price on life insurance, just either call or email me, or use our Insurant online life insurance calculator on the right here.

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