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What is a life insurance premium and how does it work?



Being fluent in life insurance requires a little patience, but if there is a term to become extra familiar with, it is "premium". This word has everything to do with what you pay to keep your coverage in place.

Life insurance has its own language. Words like beneficiaries, riders and guarantees often come up when it comes to life insurance coverage. And after a while (okay, sometimes right away) the conditions can start to run together.

Being fluent in life insurance requires a little patience, but if there is a term to become more familiar it is premium. This word is important because it has everything to do with what you will pay to keep your life insurance coverage in place.

Learning how premiums work is the key to finding coverage that protects your family without risking your monthly budget.

19659007] In this article:

What is a life insurance premium?

Simply put, "premium" means a payment. It is the amount of money you pay your life insurance company in exchange for your coverage. The payment itself (called the death benefit) is the amount of money that the life insurance company would pay your beneficiaries if you, the insurance owner, died unexpectedly.

So if you are unable to pay your premiums, your family will no longer receive life insurance coverage. This is why it is so important to get insurance with premiums, think of payments that you can afford.

Premiums for many insurances can be paid annually, quarterly or monthly. Haven Life currently offers insurance with monthly premiums.


How are life insurance premiums determined?

Calculating a premium may seem a bit mysterious. A prize may have seemed like an arbitrary number handed over from the top of a shiny skyscraper. In the end, it's about risk. How much financial risk does the insurance company take by issuing your insurance? The insurance process seeks answers to that question, and the answers affect your premium: The higher the risk, the higher the premium.

In the past, when people bought life insurance, they filled out a paper application, took a medical examination. and waited a few weeks to hear back from the insurance company. When you use an online life insurance agency like Haven Life, this risk assessment takes place in real time when you fill out your application, so you quickly get an idea of ​​how much life insurance will cost. Some of the factors that determine your premium, such as your health history and your lifestyle choices, are personal, but other variables are simple financial issues that you may be able to control.

Type of coverage

There are different types of life insurance. The most common types are full and life insurance. Life insurance costs depend on the type of insurance you choose. Whether you choose a lifetime or a life insurance policy has a significant impact on your premium. A lifetime policy lasts for a certain period of time, usually 10, 15, 20 or 30 years, while an entire life policy lasts for the rest of your life – provided you pay your premiums (there is that word again). As a result, full life insurance premiums are usually much more than futures insurance premiums, especially if you are young and healthy.

The entire life insurance usually includes a cash value function in addition to the coverage amount. If you want to learn more about the entire life coverage, Haven Life's parent company, MassMutual, can help.

For most people who are young and healthy, life insurance offers the most affordable coverage. Term life also offers the flexibility young people often need. For example, a 20-year life insurance policy may cover you while your children are young and you are still paying your mortgage. This way, you pay for the coverage you need when you need it.

The amount of coverage and term

The life insurance premiums also vary depending on the length of your insurance. It makes sense: Getting coverage for 30 years costs more than getting coverage for 20 years (the longer it is, the more likely the insurer is to have to pay a death benefit). So choosing a term length that does not exceed your actual needs will save you money. For example, if you get coverage to protect your mortgage and your house will be paid off in 20 years, getting a 30-year insurance policy can add unnecessary insurability – and unnecessary costs.

The second variable in this equation is the coverage amount. To keep premiums low, you do not get more coverage than you need. You may qualify for $ 1 million in coverage at a good price, but if you only need $ 700,000 in coverage to ensure that your family would be financially comfortable without your income, you would be paying an exorbitant premium. What if you do not know how much coverage you need? A life insurance calculator is a great place to start when deciding which insurance product to choose.

Although buying a quality life insurance policy is simple and easy today thanks to online buying options, there are some details you should know so that you do not overlook them when it comes time to choose a policy. Policymakers are usually the perfect example of a little extra that can throw a wrinkle in your insurance purchase plans.

Life insurance riders are additional features that can be added to a life insurance policy to make it more personal to meet your individual needs. . Sometimes these supplements are built into the policy, and other times they are available at an extra cost to the insurance owner.

A common type of skier that you will encounter when examining life insurance is the accelerated death benefit. This carrier is available for most insurance policies and your life insurance company may encourage you to purchase it when purchasing an insurance product. In some cases, your insurance can include this rider automatically at no extra cost.

Your age

In general, younger applicants have access to lower life insurance premiums because the younger you are, the less likely you are to die unexpectedly. Of course, you can not check how old you are, but you can check how soon you buy your coverage.

If you have been considering getting a life insurance policy, remember that every year that goes by without coverage means that you I pay a higher premium when you buy an insurance policy. If you buy a life insurance at the same level as Haven Term, the term life rate remains the same throughout your insurance period, even if it lasts for 30 years.

For example, a 35-year-old man in excellent health could receive a $ 20,000, 20-year-old Haven Term policy, issued by MassMutual, by paying a monthly premium of about $ 23. A 40-year-old man in excellent health would pay about $ 32 a month for the same coverage. That's a difference of about $ 108 a year and almost $ 1,300 over the entire insurance period. This cost savings is a huge incentive to buy insurance early.

Health and Lifestyle Information

Your health is another important element that insurers use to calculate your premium. You will be asked about your health history, your prescriptions, your existing conditions and even your family's medical history when you apply. Whether or not you use tobacco affects your health, so it also affects your premium. Underwriters also consider things like your profession and your hobbies. If you are a roofer, expect to pay a higher premium than an accountant or a college professor. If you go hunting on the weekend, you have a higher premium than someone who collects stamps.

Frequently asked questions about life insurance premiums

Once you have your coverage in place, it becomes a habit to pay premiums and you probably do not think much more about them. But if you are the curious type, here are some common questions that people often ask.

Is my premium tax deductible?

You may be able to deduct your mortgage interest, your student loan interest rate and your donations to the food pantry on your income taxes, so what about your life insurance premiums? In most cases, the answer is no.

But there is good tax news related to life insurance. If you died and your family filed a claim for your coverage, the payment would normally be income tax free. Even if your coverage was $ 500,000 or $ 1 million, your partner or beneficiary would not have to worry about paying tax on that amount.

Are premiums negotiable? tailored for you based on the information that insurers have collected from your application, medical examination and other databases.

And even if you can not price for your life insurance premium, you can (and should) shop. When doing this, make sure you pay attention to the ratings that your life insurance company has received. If a company does not value well with the independent credit rating agencies such as A.M. Best or Moody & # 39; s, then you feel less confident in the life insurance company & # 39 ;s claims capacity.

And do not forget that there is a lot you can do to get a lower premium before you get to the insurance phase. To live a healthy lifestyle to begin with, but also to ensure that you get the length of the semester and the amount of coverage that suits your needs.

Will my life insurance price match my premium?

Life insurance quotes are estimates based on the original information you provide, such as your self-assessment of your health, your age, your gender, etc. This helps life insurers to provide a ballpark figure, giving you an idea of ​​what your premiums would be. be. Until you go through the insurance process, there is no way to provide life insurance quotes that are guaranteed to match your premium. Maybe your blood pressure is higher than expected. Or maybe you've had some quick tickets in recent years. In that case, you have a higher risk for the insurance company than your original information stated, so your premium will be higher.

In addition to receiving a quote, Haven Life makes it easy and convenient to apply online – which means you can get your real interest rate anytime, anywhere and from any device. Often in a few minutes.

What does a life insurance company do with my premiums?

The premiums you pay become income for your insurance company. Like all companies' income, the money pays for the daily activities. Your premiums also help pay claims to the recipients of other policyholders who are going through the grief of losing their loved one. The remainder of their premium income becomes profit.

Rating companies regularly review the financial situation of insurance companies. High scores, such as those from Haven Life's parent company MassMutual, indicate each credit rating agency's opinion on the health of their long-term business practices and the likelihood that they will be there when you need to apply. Do not be shy when looking at these ratings before buying your coverage.

So much more than a monthly bill

A life insurance premium is a payment, just like the mortgage, utilities, student loans and Netflix. But if you died unexpectedly and your family faced financial uncertainty, the premiums you paid would be more than just another monthly bill. They would offer a doorway to financial stability for your loved ones. Some Life Insurance Offers Benefits While You Still Live – Haven Life Plus, for example, is a free rider that gives eligible Haven Term policyholders access to free and discounted offers including a fitness app, online trust and service, and more useful things to do life less difficult.

Life insurance is important, but that does not mean you should risk your monthly budget by taking on an expensive premium to make it happen. Shop around, determine your actual life insurance needs, lock in a lifetime period that leverages your current youth and good health.

And every time you make a premium payment (or rather see that the premium has been automatically deducted from your bank account) you know that it will protect your loved ones financially.

About Brittney Burgett

Brittney Burgett is Marketing and Communications Director at Haven Life, a customer-centric life insurance agency that is supported and wholly owned by MassMutual. She joined the startup more than five years ago as one of the first ten employees and oversees external communications, content, SEO and various other growth marketing initiatives.

Brittney is a passionate leader who believes that it does not have to be scary or complicated to manage your financial life and takes that philosophy to all editorial and branding work at Haven Life. Prior to her role at Haven Life, Brittney worked in public relations, her client list included brands in the technology, food and business space.

Read more by Brittney Burgett

Our Editorial Policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our editorial policy

Haven Life is a customer-centric life insurance agency that is supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to be provided and should not be relied upon for tax, legal or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Our information

Haven Term is a term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by the Massachusetts Mutual. Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a simplified Life Insurance Policy Issue (ICC19PCM-SI 0819 in certain states, including NC) issued by C.M. Life Insurance Companies, Enfield, CT 06082. Numbers and functions for insurance forms and riders may vary by state and may not be available in all states. Our California agency license number is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best company as A ++ (Superior; top category 15). The rating is from Aril 1, 2020 and may change. MassMutual has received different ratings from other rating companies.

Haven Life Plus (Plus) is the marketing name of the Plus Rider, which is part of the Haven Term policy and offers access to additional services and benefits free of charge or at a discount. The driver is not available in all states and is subject to change at any time. Neither Haven Life nor MassMutual is responsible for the provision of the benefits and services made available under Plus Rider, which are provided by third party providers (partners). For more information about Haven Life Plus, visit: https://havenlife.com/plus.html

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Get our most read stories twice a month [19659071] The The overall process of getting lifelong insurance with Haven Life was really simple. Everything was in advance and you did not have to jump to any rings to be insured. Haven Life also did a good job of explaining all the things that are included in the policy. It was not too complicated which was good. If you have a family and want to protect your loved ones, I would recommend that you give Haven Life a try. If you are single without children and a significant other, I still suggest you give Haven Life a try. The prices of Haven Life are affordable, which makes Haven Life such a good alternative if you are looking for life insurance. Haven Life was easy to get and it is affordable!

  • She was wonderful and answered all my questions

  • This is for us seniors. I decided to finally get a life insurance policy in the long run or should I say with a twist on my wife's arm.
    I'm 64 years old. Just to clarify, I have very good health, lean and very active. Had only a lumbar fusion operation.
    Anyway, I compared two companies based on my research that included this company and my current insurance company that will remain nameless than they attract former military.
    So I read other reviews about this company that require a health check, etc, etc. the same goes for the other company. Of course, a company will carry out its care and base its decision on your overall health, especially at my age compared to a thirty year old! I can not fault them.

    I already had a medical examination with the other company because I was waiting for them to get my medical records from my local VA Medical Center. I informed Haven Life about this and they were able to get a copy of the medical examination (no need to have performed twice) and received my VA records. This process takes time and it is not the company's fault.
    I estimate that the process took about 5 to 6 weeks.
    Unlike the first company, I strongly feel that Haven Life (especially acknowledging Catherine) provides outstanding service by keeping me informed along the way and listening to my concerns.
    Haven Life offered me a much better interest rate than the one mentioned. I expected to pay a much higher interest rate at my age but that's what it is.
    The conclusion here for us older people (I think you need to get this insurance for 65 years) is if you are willing to pay higher premiums compared to a younger person, get a fair competitive pricing, experience excellent customer service and be willing to be a little patient during process, then you came to the right place.

  • So far so good that I just started my policy a few days ago. The process so far has been amazing!

  • I'm licensed in TX for life and health insurance so I know excellent or poor insurance services and medical examination services. I am very happy with the approval process.


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