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Tuesday, 2 November 2010

Understand the age effect and term life insurance

A term that has been thrown around a lot of life insurance is "cost of waiting". What does this mean and how important the decision of when and how to buy? View the work of pricing life insurance and the decisive impact of age on this process.

Term life insurance differs from other insurance such as health, based on interest rate payable for a whole life policy to how old were you when you first enrolled. This makes sense, because the probability of triggering life in the interests of our aging. Age at time of registration is the main determinant of how much term life insurance pays you. The most important thing is to calculate the cost of whole life policies. It is best regarded as an example.

For example, if you are 30 years and plans to buy $ 500 billion for 20 years (eg for a newborn), the average premium for an individual company or the plan is approximately $ 20/monthly. Is $ 240 per year or $ 4,800, in the last 20 years. Say you want to wait 35 years to buy the same kind of coverage. Now the average cost is $ 5,760. That's an increase of $ 1,248 or 26% larger. And you do not have insurance for this time of year and 5 years if something were to happen, actually lost $ 500,000, plus $ 1,248. The amount of 500K is a bit more important! This comparison is for two relatively young. The cost difference only increases with age. For example, the difference between 35 and 40 years would be $ 1,440.This means you will either buy less coverage, which may stop you from enjoying the price reductions that accompany certain thresholds U.S. dollar coverage (such as $ 250, $ 500K), or you buy for a shorter period. You do not want to buy 10 years of coverage now and another 10 years (assuming you qualify based on health) 10 years later, because you must pay an amount much higher depending on your age at time.

It takes away from all this that you want to buy, as you can in a very early age. You do not want to buy too much and unfair to yourself. It makes no sense to buy $ 2,000,000 coverage when you can really afford (besides the end), $ 1,000,000. If you end the coverage lapses due to non payment, which is to win the whole purpose of the risk of life insurance. It's better to find this amount in the budget, and a lock beat a younger age. This is clearly a case where the extension and expect to pay real money!

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