Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
All life insurance is based on Commissioners Standard Ordinary Tables (CSO.) If you search the web you can see the actual tables. Companies modify the tables very little as they represent millions of lives and the information in the table is deemed quite accurate. The result of the tables is that the company can determine the number of customers at any given age that will die during a year. Since the company is sharing the risk, they know that if 1% of the population at a given age will die in the following year that they need to charge at least $1 for every $100 of face amount that they issue.
Since the company sells term insurance in increments, they might offer a one year term policy, or five, ten, twenty, thirty or even term to 65. To determine the premium they compute how many customers will probably die in each year the policy covers and compute the amount of money they will need to have on hand to pay the death claims.
In addition the companies have costs which are also included to establish the published premium that they charge. This premium is generally considered the premium for their standard risk. If for medical reasons the individual has a higher or lower than average life expectancy the company can compute a discount or surcharge depending upon the situation. This computation is based on further studies and is highly factual. However, there is also the underwriting process which might recognize a potential risk and automatically assign it a surcharge or “table rating.”
These premiums are then presented to you the consumer. Different companies will have slightly different rates and there is quite a bit of noise made about that stir. The facts are that most term policies terminate without paying a death claim. Those that pay a death claim, the amount of coverage becomes the key issue, not the premium. The death benefit is going to be multiples of the premiums, whatever it was.
The agent is the key player in this process. Carefully evaluating the amount of money those that you love will require requires the steady hand of an agent who understands your needs and the type of plans that he or she have available. Matching your ability to make premium payments with the amount of coverage you require is the agent’s task. Selecting the best agent might be the most important thing that you do in this process.
While term insurance is highly touted as the “only way to go.” You might find that there are some risks that will extend long after the term policies are scheduled to the dust bin. For those risks, permanent insurance may be more appropriate. It is a flexible product and could enhance your financial plan in other ways. The permanent plan is more likely to be in force when a claim is made. In that way it is actually cheaper than the term policy.
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Since the company sells term insurance in increments, they might offer a one year term policy, or five, ten, twenty, thirty or even term to 65. To determine the premium they compute how many customers will probably die in each year the policy covers and compute the amount of money they will need to have on hand to pay the death claims.
In addition the companies have costs which are also included to establish the published premium that they charge. This premium is generally considered the premium for their standard risk. If for medical reasons the individual has a higher or lower than average life expectancy the company can compute a discount or surcharge depending upon the situation. This computation is based on further studies and is highly factual. However, there is also the underwriting process which might recognize a potential risk and automatically assign it a surcharge or “table rating.”
These premiums are then presented to you the consumer. Different companies will have slightly different rates and there is quite a bit of noise made about that stir. The facts are that most term policies terminate without paying a death claim. Those that pay a death claim, the amount of coverage becomes the key issue, not the premium. The death benefit is going to be multiples of the premiums, whatever it was.
The agent is the key player in this process. Carefully evaluating the amount of money those that you love will require requires the steady hand of an agent who understands your needs and the type of plans that he or she have available. Matching your ability to make premium payments with the amount of coverage you require is the agent’s task. Selecting the best agent might be the most important thing that you do in this process.
While term insurance is highly touted as the “only way to go.” You might find that there are some risks that will extend long after the term policies are scheduled to the dust bin. For those risks, permanent insurance may be more appropriate. It is a flexible product and could enhance your financial plan in other ways. The permanent plan is more likely to be in force when a claim is made. In that way it is actually cheaper than the term policy.
That's the cost of insurance they charge you. It's very simple.
Some of the cheapest I've seen is about 1% annual premium of the total death benefit.
That would be about $1000 a year for $100,000 for a 55 year old male. That's cheap compared to northwestern