One of the most important health questions that people get asked when they apply for life insurance is, “Have you used a tobacco product in the last 12 months?” If you answer “Yes,” that means that in the eyes of your life insurance company, you qualify as a smoker, and that means that your life insurance company is going to expect you to pay a higher life insurance premium than you would have to pay if you were a non-smoker.
As you consider which life insurance option to purchase, you may ask yourself; what makes up the cost of the policy and the monthly premiums? Our Sales Operations Leader, Eric Mojica, can explain to you the basics.
TRANSCRIPT:
Eric Mojica: “All across the country, people are trying to secure life insurance for their loved ones. So what goes into the cost of a life insurance policy? Insurance is a way to protect yourself and your loved ones against the risk of uncertainty or lost. And your cost is based on how likely you’re going to suffer that loss or not. For example, if you’re shopping for auto insurance, you’ll pay more if you’ve had a lot of speedy tickets vs. if you’ve had a spotless driving record?
Term Life Insurance is often heralded as the best form of life insurance, and here are the reasons why:
1) It’s almost always the least expensive option. You get the most amount of coverage for the least amount of cost. Whole Life, on the other hand, is far more costly.
2) It’s flexible. You can get policies that always have the same premium, or ones that change over time. You decide what you’d like to pay.
Let’s say you’re 60 years old, and you get a 20 year “term” policy; when you turn 80 your life insurance coverage is still “in-force.” Most companies guarantee your annual renewal until the age 95. The price may change, BUT…
2) You Have Options When it Expires
You can keep the policy and pay the new premium that changes every year; but this can get costly. The second option would be to reduce your face amount so you can afford the monthly premiums and not have to take any new medical exams. A third option would be to apply for a new policy that meets your new financial needs.
One of the most important health questions that people get asked when they apply for life insurance is, “Have you used a tobacco product in the last 12 months?” If you answer “Yes,” that means that in the eyes of your life insurance company, you qualify as a smoker, and that means that your life insurance company is going to expect you to pay a higher life insurance premium than you would have to pay if you were a non-smoker. 