If you've done any shopping for life insurance you know that prices for life insurance policies can fluctuate a great deal with different companies.
It turns out that life insurance are based on three basic factors.
AGE
HEALTH RISKS
ACTIVITY RISKS
START WITH STANDARD RATE:
Life insurance carriers start off with their standard rate for a person of your age. Assuming that your health is perfect and there is no other risk associated with you, you'll get the same price as every one else who has perfect health and no risk associated with them.
NEXT STEP: TAKE A MEDICAL
A medical will tell the insurance company if you've got any serious health issues which could make you a higher risk, mortality wise.
FINALLY: RISKY ACTIVITIES
After assessing your health situation, the life insurance company wants to know if you're involved in higher risk activities with your job or hobbies etc.
Some of the the risky activities are being an pilot, doing scuba diving, sky diving etc. Activities that have the risk of death associated with them.
HERE'S THE CURIOUS PART:
Understanding that risks are risks, your real risk assessment to one life insurance company is the same for the next life insurance company. ie.. you're not going to die any faster for one life insurance company than another, to put it graphically.
WHY HIGHER PRICES WITH CERTAIN COMPANIES?
Based on the discussion above, certain companies might assess risk differently and want to charge differently than other companies.
Companies specialize in different areas
I've heard of companies that like to specialize in certain health risks more so than others. Thus they would charge lower for those health risks than other companies because they have more experience assessing the risk.
As with every industry, those who specialize in certain areas of their field can generally offer better prices and better services than other companies. The same is true for life insurance.
Some companies charge higher commissions
Some companies use sales people who go out and market in the traditional way. These sales people need to make more per commission because their process is slower. Thus the insurance company needs to charge a higher rate to compensate their insurance reps.
Some life insurance agencies (such as the ones we deal with) don't use traditional sales methods. They rely on services such as ours to find them people interested in purchasing life insurance on the internet. They work with the customer over the phone and thus their costs are much lower.
Not only that, these agencies can get pricing from many different life insurance carriers. They are able to shop from the companies that specialize in your particular risk.
I was chatting with a life insurance expert from Conservest today and asked him the following question: "Why does one company charge more than another"
Conservest Answer: No reason. The prices are set by the company based on their personal mortality tables and if one company charges more it's becuase they see a high risk. They are constantly changing and updating in most cases they are going down.
"and prices are based on Age and Health, they use the medical to confirm your health class and the premium is based on that. If you don't fit in you could be rated and have to pay more then the Standard rate."
THE BOTTOM LINE:
If you're shopping for cheap life insurance, it's really important to spend some time at it. Signing up for a quote on this site will help out the process.
Our agents will shop many different life insurance carriers for you and get you the best quote for your age and risk situation.
We advise that you ask the insurance company that you're looking at buying from if they specialize in life insurance for your situation. After doing a little digging you will probably save money and get cheap life insurance!
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